Preamble

The House met at half-past Two o'clock

PRAYERS

[MADAM SPEAKER in the Chair]

Oral Answers to Questions — HOME DEPARTMENT

Electoral Registration

Mr. Barnes: To ask the Secretary of State for the Home Department what estimates he has made of under-registration on the electoral registers which will be used in the next general election; and if he will make a statement. [10547]

The Parliamentary Under-Secretary of State for the Home Department (Mr. Tom Sackville): Figures for the number of electors on the registers coming into force on 16 February are not yet available. In 1996, there were 42.8 million names on the electoral register in Great Britain, compared with an estimated resident population of eligible age of 45 million.

Mr. Barnes: Will the new registers operating from 16 February, which will be used in the next general election, be in a better state than previous registers which had millions of people missing from them? I have raised this matter many times before in the House. Can details comparing the registered and eligible populations in each constituency be published as soon as possible so that we can see what state the registers are in? Will every effort be made to put people on supplementary lists so that, even under the current inadequate system, as many people as possible are on electoral registers before the general election?

Mr. Sackville: We continue to spend substantial sums trying to encourage people to register through advertising and in other ways. As the hon. Gentleman knows, however, even after the obvious discrimination was removed from our electoral system, we retained an element of permanency of residence as a condition. That means that those who cannot claim to have been resident in a constituency on a particular date in the preceding October will not be registered there. It does not mean that we are not making the greatest effort to ensure the highest possible level of registration.

Mr. Peter Bottomley: Does my hon. Friend agree that, by law, an electoral registration officer may not have his or her register up to date but that it must be at least five months out of date? Can serious consideration be given—perhaps not for the forthcoming general election, but for

the one after that—to introducing a system of rolling registration so that people can be registered to vote at the place where they are resident?

Mr. Sackville: A rolling register would be expensive, bureaucratic and unlikely to achieve a higher overall level of registration. The current system of a register which requires people to prove residence in October has served us well.

Mr. Henderson: Does the Minister accept that if democracy is worth having it must be paid for? Is it not embarrassing to our democracy that some 3 million adults will be disfranchised in the election that will take place in a few weeks' time? Should that not be a matter of concern to the whole House? Should not the Government now consider establishing an all-party Committee of the House to see how best we can tackle the problem and enfranchise all our country's citizens?

Mr. Sackville: Obviously ideas can be put forward, but the hon. Gentleman should remember that we cannot force people to register if they cannot be bothered or simply do not wish to register. What we can do, however, is try to encourage all those who are prepared to take an interest to take the trouble to ensure that they are on the register.

Dame Elaine Kellett-Bowman: My hon. Friend referred to a degree of permanency of residence. In considering that aspect, will he bear in mind the question of constituencies with universities? Students are there for a very ephemeral time and yet they can affect the whole outcome. They need make no effort to get on the register; they are simply put on it by the university authorities. Could they not register in their home towns rather than in those where they are ephemeral students?

Mr. Sackville: Students can register in any place where they can establish a degree of permanency of residence. If any misdemeanours are taking place involving people being registered but not at their own request, my hon. Friend's electoral registration officer should look into the matter.

Reoffending

Mr. Cohen: To ask the Secretary of State for the Home Department what is his current estimate of the proportion of the prison population who reoffend after being released. [10548]

The Minister of State, Home Office (Miss Ann Widdecombe): The most recent available information indicates that 51 per cent. of all sentenced prisoners discharged in 1992 from Prison Service establishments in England and Wales were reconvicted for a standard list offence within two years.

Mr. Cohen: Does not the fact that more than half of all prisoners reoffend within two years of release make a mockery of the Home Secretary's claim that prison works? Are not the reoffending rates similar after prison and after probation, whereas the cost per prisoner is £1,800 per month and the cost of probation is less than £200 a month? Are there not strong cost and rehabilitation grounds for putting fewer people in prison?

Miss Widdecombe: No, in either case. First, prison reconviction rates at present are better than reconviction


rates for those being sentenced in the community. Secondly, it is not merely a question of cost. The hon. Gentleman should understand that prison works by protecting the general public from the activities of those who are kept within it.

Sir Ivan Lawrence: Is it not astonishing that the reconviction rate for those sentenced in the community is higher by 4 per cent. than the reconviction rate for those sent to prison? Does my hon. Friend draw from that fact the conclusion either that the probation service is not so effective as it ought to be in rehabilitating offenders in the community, or that prison is more effective than many people think that it is in rehabilitating offenders inside prison?

Miss Widdecombe: I attribute the success of the Prison Service in rehabilitation to the tremendous strides that it has made in its programmes over the past few years. The number of prisoner hours in education has increased from 4.6 million in 1979 to 9.4 million in 1995–96.

Mr. Campbell-Savours: You have doubled the number of prisoners.

Miss Widdecombe: There has been a rise of 21 per cent. in expenditure between 1993 and 1995. The hon. Member for Workington (Mr. Campbell-Savours) called out from a sedentary position that the number of prisoners has doubled. If he works it out, he will see that the rise in the number of hours has far outstripped the rise in the number of prisoners. The types of national vocational qualification offered have increased from 24 only three years ago to 48, and there has been a similar increase in offending behaviour courses. That is where the explanation lies.

Mr. Winnick: Is it not important that those who commit the most serious crimes should be in prison in the first place? Is the Minister aware that many of us are deeply concerned that those responsible for the murder of Stephen Lawrence have not been brought to justice? Is it not important that every effort should continue to be made to put those who murdered that 17-year-old lad in the dock? We hope that speedy progress will be made by the police force.

Miss Widdecombe: Whereas I can extend my sympathy to the relatives concerned, I cannot comment on the case in the terms that the hon. Gentleman invites. Where serious crime has been committed, it is important that the perpetrators are brought to justice. If the hon. Gentleman feels that as strongly as I do, and if he believes that those who commit the most serious crimes should be in prison, why did the Labour party abstain on the Crime (Sentences) Bill last week?

Mr. Booth: As was stated in the lead-up to the Prisoners' Earnings Bill last year, Home Office research shows that prisoners released from prison after having proper work experience in prison had a reoffending rate that is 50 per cent. better. As the Home Office supported the Bill, will it go on monitoring the working of the legislation?

Miss Widdecombe: I congratulate my hon. Friend on introducing that Bill. I can confirm that it assists prisoners

if they have good work opportunities in prison. We shall, of course, monitor that and seek to increase those opportunities.

Cannabis

Mr. Gordon Prentice: To ask the Secretary of State for the Home Department if he will seek to amend the Misuse of Drugs Act 1971 to allow cannabis to be prescribed by medically qualified doctors. [10549]

Mr. Sackville: No.

Mr. Prentice: What on earth is so dreadful about allowing medically qualified doctors to prescribe cannabis when it was quite lawful before 1971? Many people with disabling conditions, such as multiple sclerosis and arthritis, claim that cannabis gives them relief. Is it not curious that only two days ago the Minister said that dronabinol, which is an active derivative of cannabis, may be prescribed lawfully by hospital doctors? Some 24 years after cannabis was banned from use in hospitals, it has been discovered that dronabinol can combat nausea suffered by patients undergoing chemotherapy. Is there not a compelling case for allowing the doctors—and not the politicians—to decide?

Mr. Sackville: If there are medicinal claims about cannabis or its derivatives, they must pass through the same mechanisms as other medicines. Unless clinical trials prove that they are safe and efficacious and that there is a consistent level of product quality, they will not be licensed as medicines.
The World Health Organisation made recommendations about dronabinol. A company must lodge a licence application for the product, which must then pass through clinical trials in order to get a licence in this country. In the event of medicinal claims about products, applications can be made to the relevant authorities at the Medicines Control Agency.

Mr. Harry Greenway: Does my hon. Friend recall the words of the late Home Office pathologist, the famous Professor Francis Camp, who said that soft drugs such as cannabis inevitably lead to hard drugs and that hard drugs lead to death—often within seven years? Is that not a warning to the hon. Member for Pendle (Mr. Prentice), for the Liberal Democrats and for all who advocate the use of soft drugs?

Mr. Sackville: Although there are some genuine cases, there is no doubt that many of those calling for the medicinal use of cannabis are using it as a stalking horse to promote the campaign for its legalisation. The Liberal Democrat party conference voted for the legalisation of cannabis, and I hope that the Liberal justice and home affairs spokesman, the hon. and learned Member for Montgomery (Mr. Carlile), will withdraw from that decision. If there are medicinal uses for cannabis, they must be proved. In the absence of such evidence, we must not send a confused message to young people when we have told them that cannabis and all illegal drugs are dangerous and should be avoided.

Mr. Flynn: Would not the better message be that all drugs are dangerous, that young people who smoke


cigarettes are 22 times more likely to use hard and soft drugs than other groups, and that in 95 per cent. of cases hard drugs are used under the influence of alcohol? Does the Minister recall that, in answer to a letter from three hon. Members representing three political parties—including his own—the Medical Research Council said that it was an established fact that cannabis was uniquely valuable in treating multiple sclerosis, the side-effects of chemotherapy and several other diseases and that there was no replacement product? Why on earth are the Government sticking to their line in order to gain popularity with the voters and thereby denying the sick a unique medicine?

Mr. Sackville: It is open to any producer to apply for a licence for a cannabis product. As to the hon. Gentleman's comments about other dangers, no one disagrees that pharmaceutical drugs and cigarettes are dangerous. However, he should not use them as a front for implicitly calling for the legalisation of drugs. I hope that Opposition Front Bench Members will distance themselves from his remarks.

Members of Parliament

Sir David Knox: To ask the Secretary of State for the Home Department if he will make a statement on the number of hon. Members. [10550]

The Secretary of State for the Home Department (Mr. Michael Howard): The full complement of this House stands at present at 651 right hon. and hon. Members. That figure will rise to 659 from the next general election.

Sir David Knox: After the general election, there will be 34 more Members of Parliament than there were when I was first elected to the House almost 27 years ago. Does my right hon. and learned Friend agree that the time has come at least to stabilise the number of Members of Parliament or, preferably, to start to reduce the number?

Mr. Howard: I entirely agree with my hon. Friend. The steady increase in the number of constituencies in recent years is a consequence of the way in which the rules for the redistribution of seats have been interpreted. I do not think that that outcome was wholly foreseen when the rules were first agreed, which is why I have announced my intention to conduct a review of them.

Mr. Dalyell: As the question on the Order Paper is about "honourable" Members, may I ask the Home Secretary whether he has had brought to his attention the new statements of Mohamed Al Fayed on television, which many of our constituents throughout the country have seen, reflecting the gravest allegations—

Madam Speaker: Order. I am sure that the hon. Gentleman is making a very good point with which we may have some sympathy, but it really does not relate to

the question on the Order Paper, which is an important question, and I shall call a couple of hon. Members from both sides of the House.

Mr. Barry Jones: Does the Home Secretary agree that what is required for this honourable House is many more Labour Members on the Government Benches?

Madam Speaker: I thought that I was doing the House a service, but it does not appear that I am. However, I am sure that the Home Secretary will want to reply.

Mr. Howard: I think that the hon. Gentleman will have to whistle in the wind for quite some time. The truth of the matter is that the House provides a most effective way of representing the views of our constituents, as reflected by a majority on the Conservative Benches. I have every confidence that such a majority will continue after the election.

Sir Patrick Cormack: Would not the creation of a Parliament with tax-raising powers north of the border call into question the number of Scottish Members in the House? Is that not a particularly important issue to address?

Mr. Howard: I entirely agree with my hon. Friend. I was disappointed that the hon. Member for Linlithgow (Mr. Dalyell) did not raise the West Lothian question, which he originated and which is central to this issue. The Labour party has still not begun to provide an answer to the question: why should Members be elected in Scotland to come to this place to decide matters of health, education and transport in England when English Members of Parliament will have no say whatever in deciding questions of health, education and transport in Scotland?

Mr. Llwyd: Does the Home Secretary not realise that the answer is simple and straightforward? He could reduce the number of seats in the House by 112 immediately by granting proper legislative Parliaments to both Scotland and Wales, which would be to everyone's benefit.

Mr. Howard: I am not sure that the hon. Gentleman's view of what should happen is entirely shared by Opposition Members who argue the cause of devolution so strenuously. There may well be a logical consequence and a link between the two which the hon. Gentleman identifies, but it is a question and a link that the Labour party has consistently failed to recognise.

Metropolitan Police

Sir Michael Shersby: To ask the Secretary of State for the Home Department if he will call for a report from the Commissioner of Police of the Metropolis on current manning levels and prospects for recruitment during 1997–98; and if he will make a statement. [10552]

Mr. Howard: I regularly discuss with the Commissioner staffing levels and prospects for recruitment in the Metropolitan police. He assures me that


the proposed settlement for the Metropolitan police for 1997–98 would enable him to increase officer strength to 27,400 during 1997.

Sir Michael Shersby: Despite the very welcome drop in crime of about 13 per cent. in the Metropolitan police area as a whole, is my right hon. and learned Friend aware that there is concern in the outer London boroughs—particularly in south-west area No. 5, which includes my constituency—about proposed changes in manpower? Is he further aware that the need for effective policing means that there is a need to maintain those manpower levels? Will he therefore review the impact of the national funding formula arrangements on the Metropolitan police and provide an appropriate mechanism to ensure that the special needs of the Metropolitan police area are taken fully into account and that manpower continues to be maintained at a high level?

Mr. Howard: I have, indeed, undertaken to review the application of the national funding formula to the Metropolitan police and the arrangements that we have made for the funding of the Metropolitan police include a recognition of the special needs of the Metropolitan police force. Indeed, the funding that we propose for 1997–98 represents a 3.4 per cent. increase on the 1996–97 allocation—an increase of no less than £55 million.

Mr. Alex Carlile: Will the Home Secretary explain how he reconciles with his declared policy on the effectiveness of police officers a reduction of 755 Metropolitan police officers in the past four years and a reduction nationwide of about 1,000 police officers over the past four years? Those are Home Office figures.

Mr. Howard: The truth of the matter is that the September 1996 figures showed that there were more than 98,000 police constables in England and Wales, which is more than there have ever been before. The public are interested in seeing police officers on the street on patrol duty helping to create a safer Britain. That is exactly what is happening.

Mr. Congdon: I very much welcome the fact that there are 5,000 extra police officers in the Metropolitan police area compared with 1979. When my right hon. and learned Friend quite properly reviews the national funding formula, will he take particular account of the impact on outer London?

Mr. Howard: I understand my hon. Friend's point. The internal allocation of funding and officers within the Metropolitan police area is an operational matter for the Commissioner, but I am sure that all relevant matters will be taken into account in the review.

Clear-up Rates

Mr. Bayley: To ask the Secretary of State for the Home Department what proportion of crimes notified to the police were cleared up in the latest year for which figures are available. [10553]

The Minister of State, Home Office (Mr. David Maclean): Clear-up rates vary considerably, depending on the type of crime. The overall clear-up rate for

notifiable offences in 1995 was 26 per cent. For the most serious types of crime, clear-up rates were very high: 92 per cent. of all homicides, 77 per cent. of acts of violence against the person and 76 per cent. of sexual offences were cleared up.

Mr. Bayley: Is the Minister aware that since the Conservatives came to power in 1979 the number of offences committed in North Yorkshire has trebled from 20,000 to 59,000 a year? According to the chief constable's reports during that period, the detection rate has fallen from 49 per cent. to 23 per cent., and North Yorkshire now has fewer police officers than it had in 1979 under the Labour Government. Is that not a crushing indictment of the Conservatives' failure to control crime and convict criminals? Is it not time that the Conservatives went?

Mr. Maclean: I suggest that the hon. Gentleman brings his facts up to date. According to the figures that we have received from North Yorkshire, the chief constable expects to recruit 20 extra officers this year as a result of the additional funding that we are giving him. If the hon. Gentleman and his party were concerned about crime in North Yorkshire in the 1980s, they did not show much sign of it. They voted against everything that chief constables in North Yorkshire and elsewhere wanted in order to tackle crime. With regard to the power of the Attorney-General to review lenient sentences, for instance, Labour Members voted against that measure then, and they did not even have the guts to vote for the Crime (Sentences) Bill last week.

Mr. Bayley: You are lying, and you know it.

Madam Speaker: Order. The hon. Gentleman has used unparliamentary language, which is unacceptable. Will he withdraw what he has just said?

Mr. Bayley: The Minister's comments were—[Interruption.]

Madam Speaker: Order. I will deal with this matter.

Mr. Bayley: The Minister's comments were a total misrepresentation of the position in the 1980s, but if you require me to withdraw the word that I used, Madam Speaker, I do so.

Madam Speaker: I do require you to do so.

Mr. Nicholas Winterton: In seeking to cool the atmosphere, may I ask whether my right hon. and learned Friend accepts that closed circuit television has made a major contribution not just to reducing crime, but to bringing people who have committed offences before the courts? Will he continue to give maximum financial and other support to the establishment of closed circuit television systems in town centres, and particularly in the centre of my town of Macclesfield, which has submitted an application that I hope will be warmly endorsed by his Department?

Mr. Maclean: My hon. Friend is well known as one who pours oil on troubled waters whenever he can. He will know of the tremendous funding that we have given


to the establishment of closed circuit television. We see CCTV as a means of preventing crime, of catching criminals and of helping to convict the guilty, which is why we put £5 million into it in the first year and £15 million last year. We are reviewing the bids for CCTV in the current round and we shall consider all representations carefully because we want to spend the £15 million as wisely as possible throughout the country. I thank my hon. Friend for his warm welcome for that initiative.

Mr. Michael: Can we cut through the Minister's rhetoric and deal with facts? Does the Minister not realise that the only people who are happy with the Government's record on crime are the criminals? As crime has doubled and prosecutions have dropped, the criminals are twice as likely to get away with it as they were under the last Labour Government, and three times as likely to get away with violent crimes. Is the Minister proud of his record?

Mr. Maclean: That was rhetoric if ever we heard it. The hon. Gentleman talks about criminals being happy. I think that it was the head of the Superintendents Association, Chief Superintendent Brian Mackenzie, who said this week—following Labour's behaviour in the other place—that criminals would be clapping their hands with joy because Labour peers had voted for two contradictory amendments. [Interruption.] I have not given the House rhetoric; I have given the House facts. I have given the House the facts of the Labour party's voting record, which has been consistent in the 1980s and the 1990s. Last week, when we discussed the Crime (Sentences) Bill—which gives powers to lock up automatically, for life, the most serious violent and dangerous offenders, powers to lock up drug dealers for seven years and powers to lock up persistent burglars for three years—Labour Members abstained. They voted against such legislation in the 1980s and abstained in the 1990s. That is why they will be rejected in a few months' time.

Woodhill Prison

Mr. Butler: To ask the Secretary of State for the Home Department what plans he has for the future of Woodhill prison. [10554]

Miss Widdecombe: There are no plans to change the role of Woodhill as a local prison, or its capacity. It will also continue to take category A prisoners, and a programme of work is under way to provide improved physical and procedural security to meet the relevant recommendations of Sir John Woodcock and General Sir John Learmont.
Woodhill will continue to take a small number of disruptive prisoners, and they will be housed in a new close supervision unit. In addition, the same building will include a small unit for holding female prisoners who need to be kept in conditions of high security.

Mr. Butler: May I begin by saying what a pleasure it will be to address my hon. Friend as my right hon. Friend? I offer my congratulations on behalf of Conservative Members.
My hon. Friend will be aware that there has been great concern in my constituency and elsewhere near Woodhill about constant reports that there is to be upgrading and

that money is to be spent to permit Myra Hindley to be held there. May I make it clear to my hon. Friend that although we want Myra Hindley to be held for as long as possible, we do not want her to be held anywhere near Milton Keynes and we do not require luxury facilities to be built for that purpose?

Miss Widdecombe: I think that I can reassure my hon. Friend. No decision has been made about the location of any particular prisoner in connection with Woodhill. As for the stories of luxury, they are similar to the scaremongering stories that we often hear from the Labour party. In fact, there is only the most basic provision in Woodhill, in keeping with my right hon. and learned Friend the Home Secretary's policy that prison should be decent but austere. There will be no in-cell television or radio, normal volumetric control will apply and furniture and equipment will be standard prison issue, including metal-frame beds. Association areas will have standard furnishings and equipment.

Recorded Crime

Mr. Sweeney: To ask the Secretary of State for the Home Department if he will make a statement on the overall levels of recorded crime for the last three years for which figures are available. [10555]

Mr. Howard: Recorded crime levels in the last 12 months to June 1996, the latest period for which figures are available, were 10 per cent. lower than three years before that. That is a fall of more than half a million offences—the biggest continuous fall over three years since records were first kept in 1857.

Mr. Sweeney: Will my right hon. and learned Friend confirm that the figures that he has given compare favourably with those for any country in the Organisation for Economic Co-operation and Development? Will he join me in congratulating the Vale of Glamorgan police, who have achieved a substantial reduction in the rate of recorded crime for the last two years? Will he also accept the plaudits of the people of the Vale of Glamorgan for the contribution made by the additional police whom he has provided? Tougher penalties for criminals have helped to produce that success.

Mr. Howard: In the last two years for which figures are available, the fall in recorded crime in England and Wales was the highest recorded in a survey of 18 OECD countries. Across the country, the police deserve congratulation on that success. I am delighted to be able to join my hon. Friend in congratulating the police in the Vale of Glamorgan on their success.

Mr. Sheerman: The Home Secretary must know that the public are suffering from reporting fatigue. They are fed up of reporting burglaries and car break-ins. Real crime is still rising, and rising fast. Is not it time that he spoke to the great British public, who would tell him that time and again?

Mr. Howard: The odd thing is that when the crime figures were rising, Labour never criticised them. When we introduced the Criminal Justice and Public Order Bill, the Leader of the Opposition, no less, asked:


If it does not cut crime, will he accept that it has failed?"—[Official Report, 11 January 1994; Vol. 235, c. 21.]
Since it has been on the statute book, recorded crime has consistently fallen. I hope that the Labour party will now accept that that Bill and our other measures have succeeded in helping to make Britain a safer place.

Mr. Garnier: Does my right hon. and learned Friend agree that one of the best ways to reduce crime is to introduce closed circuit television'? In the borough of Oadby and Wigston, in my constituency, the predominantly Liberal Democrat council refuses to support an application by schools and the police in Leicestershire for its introduction. Following that application by the police and by Conservative-minded and anti-crime people, £95 million of Government money is to be spent introducing it, to the benefit of the population.

Mr. Howard: I am not at all surprised by what my hon. and learned Friend said. The attitude of that Liberal Democrat-controlled council is typical of Liberal Democrats across the country. The hon. and learned Member for Montgomery (Mr. Carlile) likes to pontificate, but the actions of Liberal Democrats in control of local government show that they do not care in the slightest about taking effective action to deal with crime.

Mr. Straw: Does the Home Secretary recognise that he is no more convincing when he talks about crime figures than he was when he used to talk about unemployment figures? Why does he not own up not to figures for the past 12 months but to those for the past 18 years, during which crime has doubled? The Conservatives have achieved the worst record of any Government since the war. Internationally, they have the worst record of any industrialised country. On serious crime alone, their record since 1979 is 10 times worse than that of the United States. That is a record of abject failure.

Mr. Howard: Unlike the hon. Member for Huddersfield (Mr. Sheerman), the hon. Gentleman seems to set great store by the figures. I hope that he accepts what the figures show for the past three years. He is not in the best position to talk about sounding convincing. Earlier this week, he gave an interview to The Independent, which was reported by no less a person than Polly Toynbee who said, roughly, that she trusted the hon. Gentleman because she did not believe a word that he was saying.

Drug Abuse (Prisons)

Mr. Hawksley: To ask the Secretary of State for the Home Department what initiatives the Prison Service is taking to control prisoners' access to drugs. [10557]

Miss Widdecombe: Specific measures to control the supply of drugs into prisons include enhanced searching, increased use of closed circuit television and sniffer dogs. We are also assessing the results of a pilot scheme on the mandatory use of non-contact or closed visits. In addition, many establishments have taken the opportunity to develop local initiatives for controlling the supply of drugs.

Mr. Hawksley: I had hoped that when people were sent to prison, there would be an opportunity to reduce the

amount of drugs that they took. I welcome the mandatory drug-testing regime, but its results show that in Cardiff 74 per cent. of tests were positive and in Featherstone and Dorchester the figure was more than 50 per cent. Has any disciplinary action been taken against the warders and governors of prisons that show high levels of positive results from mandatory testing? They appear to be turning a blind eye to the problem, because almost all the drugs must come from visitors, whom they could control.

Miss Widdecombe: It is certainly not the case that a blind eye is being turned to drugs in prisons—many initiatives and ring-fenced funding have demonstrated our commitment to combating the problem. A prisoner who was found to have taken drugs could be subject to disciplinary action, resulting in the loss of up to 42 days' remission; a prison officer who was found have brought in drugs would be subject to dismissal; and a visitor who was found to have brought in drugs would be subject to prosecution. We have a firm programme, which is working.

Mr. George Howarth: I congratulate the hon. Lady on being made a Privy Councillor. Will she acknowledge that, over the past few months, Ministers have repeatedly given me inaccurate information on the scale and types of drugs being detected in the prison system? Does she accept that as soon as accurate information is available, it should be published so that we can make a proper assessment of what is happening in prisons and informed decisions on how to combat the growing menace of drug abuse in our prison system?

Miss Widdecombe: I thank the hon. Gentleman for his kind remarks. As I met him this week specifically to discuss the issue, he will be aware that there are some doubts and questions—which are perhaps not particularly large or with a particularly vast effect—on the integrity of retests, which are given after test results have been challenged, and on the impact of that matter on the overall figures. He will be aware—as I have given him an undertaking—that the matter is being examined urgently, that the figures are being refined and that any past statements we have made that may have been based on old and questionable figures will be corrected.

Violent Crime

Mr. McAvoy: To ask the Secretary of State for the Home Department if he will make a statement on the finding of the British crime survey regarding the proportion of adults who were victims of violent crime once or more during 1995. [10559]

Mr. Maclean: The 1996 British crime survey found that overall 5.2 per cent. of adults were victims of violent crime one or more times during 1995. That percentage includes woundings, robberies and domestic violence.

Mr. McAvoy: Are not those figures a shocking indictment of the Tories' record on crime prevention? They claim to belong to the party of law and order, but, during a 12-month period, one in 14 adults were mugged at least once, and very few of the offenders were caught. Does the Minister accept that a Government who are incapable of protecting citizens should go?

Mr. Maclean: The hon. Gentleman has not been paying attention to the substantial falls in crime over the


past three years. We do not merely claim to be the party of law and order—we are the party of law and order, because we vote for law and order measures. If the hon. Gentlemen and the Labour party want to inherit that mantle, they had better start voting for such measures, rather than voting against them or abstaining.

Mr. Robert G. Hughes: Are not the reductions in crime, which are very welcome, a direct result of the measures taken by the Government to ensure that legal obstacles are swept aside, so that guilty people can be convicted? Are not criminals the only group who would welcome the election of a Labour Government, as they would know that a Labour Government would not lift a finger to remove other legal obstacles to imprisoning more criminals?

Mr. Maclean: My hon. Friend is absolutely right. As Chief Superintendent Brian Mackenzie said this week, criminals will not have been lifting their fingers but clapping with joy at the decision taken by Labour peers in another place. Over the past three years, under a Conservative Government, crime has decreased considerably, which is testimony to the record number of police constables that we now have.

Police Duties

Mr. Hawkins: To ask the Secretary of State for the Home Department what estimate he has made of how many more police officers will be on the beat in 1997 than (a) 1979 and (b) 1992. [10560]

Mr. Maclean: On the basis of chief constables' estimates, by March 1997 there could be over 16,000 more police constables in England and Wales than there were in May 1979, and about 3,000 more than in March 1992.

Mr. Hawkins: I thank my right hon. Friend for that answer. Do not those figures demonstrate that the Conservative party has consistently supported a policy of getting more police officers back on the beat? Will he confirm that the Government intend to provide ever more funding for ever more police officers on the beat? Is it not true that, on law and order, the British people can trust only the Conservative party—unlike the Labour party, whose Front-Bench spokesman was this week so strongly supported by a fellow 1960s liberal?

Mr. Maclean: My hon. Friend is absolutely right. We do not need to look at forecasts to see the record of the Labour party in power on police numbers. In 1979, the police force was 8,000 under establishment; now, we have 16,000 more constables, paid for and provided by the British taxpayer under a Conservative Government. We shall continue with our pledge to have 5,000 more police officers—I notice that the shadow Home Secretary has not acknowledged or promised to commit himself to that pledge.

Mr. Hutton: Will the Minister remind the House how many police forces in England and Wales will have fewer officers on the beat in 1997 than in 1992? If he needs any

help in answering that question, I can tell him that one of those police forces will be Cumbria constabulary, which covers his constituency and mine.

Mr. Maclean: The hon. Gentleman is totally wrong on that, too. I have given the House the figures, which show that we have record numbers of constables, and they are constables for operational duty. Cumbria, too, has benefited from the increased funding provided for the 5,000 more officers promised by my right hon. Friend the Prime Minister. A party that left the police force 8,000 under strength is in no moral position to quibble about the present record police numbers.

Oral Answers to Questions — PRIME MINISTER

Engagements

Mr. Salmond: To ask the Prime Minister if he will list his official engagements for Thursday 23 January. [10577]

The Prime Minister (Mr. John Major): This morning, I presided at a meeting of the Cabinet and had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall be having further meetings later today.

Mr. Salmond: Does the Prime Minister realise that for £200 million we could re-equip every primary school in the United Kingdom with books and new computers to the tune of £10,000 per school? Would not that be a more meaningful project for the millennium generation than building a giant dome in Greenwich with a lifespan of 10 years? How does he think people in Birmingham, Swansea or Glasgow feel about the concentration of funds on Heseltine's folly on the Thames?

The Prime Minister: Many different projects will come out of the millennium fund—all of them worthy—including that to which the hon. Gentleman referred. It is not a question of having only a single project for the millennium. As a result of the lottery, which we established, about £1.8 billion will be available for the millennium. It will be spent in a variety of ways, and I think that, in one way or another, it will benefit almost every part of the country.

Mr. Alexander: Is my right hon. Friend aware that, since the last general election, unemployment figures have fallen dramatically and without resort to a windfall tax? If anyone was minded to impose one, should not we be told which companies would be subject to it, on what basis they would be subject to it, how much it would cost them and what revenue would result?

The Prime Minister: I certainly agree with my hon. Friend about the desirability of knowing precisely what the windfall tax might amount to and who would pay for it. There seems to be some confusion about who would pay for it. I gather that yesterday the Leader of the Opposition's office said that British Airways did not fit inside the terms of the windfall tax but that the shadow Trade and Industry Secretary said that, as far as she was aware, no one had ruled out the fact that British Airways


would have to pay a windfall tax. Remarkably, having contradicted the leader's office, she went on to add that she did not think there was any confusion about that policy.

Mr. Blair: The Prime Minister seems very keen to ask me questions and have me answer them. I suggest that if he is really keen on that, he goes ahead and calls the general election. However, let us do things in a more conventional way to begin with.
After this morning's Cabinet meeting, will the Prime Minister confirm unequivocally what he said unequivocally in December: that he will not rule out the option of joining a single currency in the next Parliament, even in the first wave, and that that will remain his party's position at the next general election?

The Prime Minister: I can certainly confirm that point and I will explain to the right hon. Gentleman what the Cabinet did and decided this morning. My right hon. and learned Friend the Chancellor has conducted a review of the criteria for a single currency and that was looked at in depth in Cabinet this morning. We have concluded, on the basis of that detailed examination of the criteria and on the basis of the information currently available, that it is very unlikely, although not impossible, that a single currency will be able to proceed safely on 1 January 1999. I am talking not just about Britain's participation, but about the single currency itself. If it did proceed without reliable convergence, we would not, of course, be part of it.

Mr. Blair: Let us just—[Interruption.]

Madam Speaker: Order.

Mr. Blair: Let us be clear about what the Prime Minister means there. Is he saying that it is unlikely—

Mr. David Evans: What is your policy?

Madam Speaker: Order. This is not a time when the Opposition answer questions; it is a time when the Opposition ask questions.

Mr. Blair: Let us be clear about what the Prime Minister is saying, particularly in light of the interview that the Chancellor has just given on television. Is the Prime Minister saying that it is unlikely that the whole system will go ahead on 1 January 1999? Is it clear that if the system does go ahead on 1 January 1999, he retains the option to join?

The Prime Minister: If the right hon. Gentleman reads what I have said, he will find that I answered that question quite explicitly just a few moments ago. I said that on the information currently available, it was very unlikely that the single currency would proceed safely on 1 January 1999 and that if it did proceed without reliable convergence, we would not be part of it.

Mr. Blair: The Prime Minister is not answering the question of whether he agrees with the Chancellor that if

the single currency does proceed on the right criteria, he retains the option to join. Let him answer that question specifically and then let him answer this question, too. If that is the position of the Conservative party, is it the position of the whole Conservative party? [HON. MEMBERS: "Yes."] "Yes", they all chorus. Will he then tell us whether he will prevent—[HON. MEMBERS: "Bye bye."] I know quite well why Conservative Members want this question to be shouted down. Will the Prime Minister undertake to say that if that is the position of the whole Conservative party, he will prevent any group of Conservative party candidates from standing on the manifesto of ruling out the option altogether?

The Prime Minister: If the right hon. Gentleman had had a mirror in front of him so that he could see the faces behind him, he might just have settled on my first two answers, both of which I am happy to reiterate to him.

Mr. Yeo: Does my right hon. Friend agree that if any politicians try to persuade voters that living standards and pay packets are safe in their hands by making a few pledges about income tax rates, and if those politicians do not simultaneously and unequivocally rule out any tampering with the ceiling on national insurance contributions, they are guilty of a gross and serious fraud on the British people that only he and a continuing Conservative Government can prevent?

The Prime Minister: It was an extraordinary speech by the shadow Chancellor the other day, and one I greatly enjoyed reading and will greatly enjoy revisiting time and again between now and the election. The reality is that it is not a case of whether a Labour Government would increase taxes; it is simply a question of where a Labour Government would increase taxes. Would it be by increasing national insurance contributions, changing the rate of national insurance contributions, cutting tax allowances or raising inheritance tax? The scope is very wide.

Mr. Blair: What about the 22 tax rises?

Mr. Major: Twenty-two tax rises says the Leader of the Opposition. Which of those would he repeal? Which of those would he reverse? What about the 25 tax reductions that he never mentions?

Mr. Cohen: To ask the Prime Minister if he will list his official engagements for Thursday 23 January. [10578]

The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.

Mr. Cohen: Is the Prime Minister aware that, in my constituency, one in five primary school children are taught in classes with more than 30 other children? [AN HON. MEMBER: "Lucky."] A Conservative Member says, "lucky." Does the Prime Minister agree with that? I presented the Class Size (Reduction) Bill, and Labour has made a firm election pledge on the matter. Why have his Government done nothing except preside over ever-rising class sizes? Why do his Government prefer silly status symbols to sensible class sizes?

The Prime Minister: I am not sure whether that counts as an expenditure commitment; it will be interesting to see in due course. The proportion of children in classes of more than 31 has fallen since 1979. Beyond that—[Interruption.] Hon. Gentlemen might wait a moment. Beyond that, there is evidence that parents agree that class size is not the most important factor. If the hon. Gentleman doubts that, let me tell him that the average class size for 11 to 16-year-olds in Islington is smaller than at the London Oratory.

Mr. Bill Walker: Does my right hon. Friend agree that it is less expensive to keep good youngsters good, which is why any initiative to expand the cadet forces must be welcomed? Such an initiative would impose on left-wing authorities the cadet forces' right of access to school property and buildings.

The Prime Minister: I saw the speculative stories in the press this morning about cadet forces and must say that they were a touch overblown in the way in which they were printed. I strongly encourage participation in cadet forces. They provide young people with the opportunity to develop qualities of responsibility, self-reliance, resourcefulness and endurance.

Mr. Tony Banks: Why did the right hon. Gentleman not join, then?

The Prime Minister: I did not join because I was playing cricket, which provides exactly the same qualities for people.
There are now more than 130,000 young people in the cadet organisation. I would certainly wish to encourage wider voluntary participation in the cadets. That of course requires more assistance from adult volunteers, but I hope that it will be possible to increase the scheme.

Mr. McAvoy: To ask the Prime Minister if he will list his official engagements for Thursday 23 January. [10579]

The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.

Mr. McAvoy: Will the Prime Minister confirm that one of his reasons for wanting school children to join the cadets is that they can learn the qualities of loyalty, self-discipline and leadership? Is it not therefore regrettable that the Defence Secretary, the Deputy Prime

Minister and the Prime Minister were never members of the cadets, as the first needs lessons in loyalty, the second in self-discipline and the third in leadership?

The Prime Minister: That was very well rehearsed. [HON. MEMBERS: "Author."] One scans the sides to my hon. Friends' cries of "Author". The hand behind the words can readily be discerned.

Mr. Bellingham: To ask the Prime Minister if he will list his official engagements for Thursday 23 January. [10580]

The Prime Minister: I refer my hon. Friend to the answer I gave some moments ago.

Mr. Bellingham: Does the Prime Minister agree that businesses need certainty and stability when planning investment? Do not the conflicting statements about which companies would pay a windfall tax prove yet again that there is a gaping hole at the heart of Labour's spending plans that can only—

Madam Speaker: Order. The hon. Gentleman must ask a question about the Government's policies. If he can do that, I will hear him, but if he cannot he must resume his seat.

Mr. Bellingham: Is the Prime Minister aware that any windfall tax would lead to higher gas, water and electricity bills for my constituents?

The Prime Minister: It is undisputed that if there were to be a new tax at an undisclosed rate on an undisclosed number of companies at an undisclosed time, it would have an impact not only on the price of the products those companies produce, but on the dividends that the shareholders legitimately expect from having invested in those companies. At the moment, there is complete uncertainty about any windfall tax proposals. Clearly, the proposals are coming apart at the seams. It is a case of give Labour spokesmen the facts and let them draw their own confusions.

Mr. Robert Hughes: Can the Prime Minister say why he is spending hundreds of millions of pounds in compensation for farmers in the BSE crisis and is preparing to spend more than £100 million in compensation under the Firearms (Amendment) Bill, yet adamantly refuses to pay any compensation to those infected with hepatitis C by contaminated blood transfusions? Where is the justice in that? Will he take personal charge, show some compassion and, even now, ensure that legitimate compensation is paid?

The Prime Minister: Everyone has great sympathy for the people who suffer from hepatitis. The underlying point is essentially whether action was taken that could have been better done at the time that then created the problem faced by the sufferers from hepatitis. If one accepted that principle, it would be a wholly new principle for the national health service and not one that any Government have accepted in the past. The hon. Gentleman himself understands that.

Business of the House

Mrs. Ann Taylor (Dewsbury): May I ask the Leader of the House for details of future business?
The Lord President of the Council and Leader of the House of Commons (Mr. Tony Newton): The business for next week will be as follows:
MONDAY 27 JANUARY—Until about Seven o'clock, Second Reading of the Sex Offenders Bill. Followed by progress on remaining stages of the Education Bill.
TUESDAY 28 JANUARY—Conclusion of remaining stages of the Education Bill.
WEDNESDAY 29 JANUARY—Until Two o'clock, there will be debates on the Motion for the Adjournment of the House.
Conclusion of remaining stages of the Crime and Punishment (Scotland) Bill.
Motion on the Police Grant Report (England and Wales).
THURSDAY 30 JANUARY—Until about Seven o'clock, Second Reading of the Civil Procedure Bill [Lords].
FRIDAY 31 JANUARY—Private Members' Bills.
MONDAY 3 FEBRUARY—Motions on the English Revenue Support Grant Reports. Details will be given in the Official Report.
The House will also wish to know that on Wednesday 29 January there will be a debate on artists' resale rights in European Standing Committee B. Details of the relevant documents will be given in the Official Report.
Wednesday 29 January:
European Standing Committee B: European Community Document: 7050/96 relating to Artists' resale rights. Relevant European Legislation Committee Reports: HC51-xx111 (1996–96). Monday 3 February: The relevant orders are as follows:
The Local Government Finance Report (England) 1997/98, Special Grant Report (No 23); The Limitation of Council Tax and Precepts (Relevant Notional Amounts) Report (England) 1997/98.
I regret that once again I am not able to be as forthcoming as I would like about the second week.

Mrs. Taylor: I start by thanking the Leader of the House for moving the debate on the police grant report to Wednesday which will allow more hon. Members to participate in the debate on the English revenue support grant reports on the following Monday. Can he tell us whether an Opposition day will be scheduled during that week?
Are the Government intending to respond to Lord Nolan's suggestion today that the funding of political parties should be examined by a Select Committee of the House? Does the Leader of the House agree that that issue should be examined, but that it is a pity that the remit of the Nolan committee was not widened as requested by the Labour party two years ago? Does he further agree that the principle of an independent inquiry has to be maintained in all those areas if public confidence in any new rules is to be established? Is not the Nolan committee itself an appropriate body to look at party funding?
Secondly, what arrangements is the Leader of the House making to ensure that the House is kept updated on the issue of BSE, in view of the reported memo from the Meat and Livestock Commission that the rules to protect the public from BSE are still being broken and today's report that cattle are being exported with misleading BSE-free certificates? The issue has been widely discussed, but it still causes much concern to constituents and Members of Parliament and everyone should be kept as fully informed as possible. Will there be a statement next week?
Thirdly, has the Leader of the House seen today's report on child benefit fraud by the Select Committee on Social Security? If so, will he now reconsider his refusal of our offer of co-operation on legislation to change the rules for obtaining birth certificates to close "The Day of the Jackal" loophole? Does he now regret not taking up the offer that I and my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) made in November 1995? Has he ruled out taking any action in what is left of this Parliament? Would not closing that loophole save millions of pounds of taxpayers' money?
Finally, what are the Government's intentions with regard to the Wirral, South by-election?

Mr. Newton: First, I thank the hon. Lady for her acknowledgement of the way in which we have responded, following discussions in the usual channels, to the number of points made about next week's business, including the handling of the Education Bill. I am also aware of the desire of the Labour party—and, no doubt, the minority parties—for Opposition time, and I continue to bear that in mind.
So far as Lord Nolan is concerned, I thought the request by the hon. Member for Dewsbury was a little curious as she did not acknowledge the fact that there was a thorough investigation by the Select Committee on Home Affairs in 1994. It may be that she preferred not to refer to that because we have implemented all the recommendations and the Labour party has not.
I cannot promise a statement next week on BSE, but I will bring the hon. Lady's point to the attention of my right hon. and learned Friend the Minister of Agriculture, Fisheries and Food, who has over many months made plain his willingness to keep the House informed on developments when he thinks it appropriate.
On the question of the Select Committee on Social Security's report on fraud, we recognise that the report makes a valuable contribution to the debate on curtailing fraud, and my right hon. Friend the Secretary of State for Social Security will give the recommendations careful consideration. I will also draw his attention to the point that the hon. Member for Dewsbury has made today—I acknowledge that she has made it on previous occasions—about birth certificates.
Lastly, the hon. Member for Dewsbury will be aware of what has been said by my right hon. Friends on the Wirral, South by-election. The moving of the writ is not a matter for me and I cannot add to what has been said.

Mr. Charles Wardle (Bexhill and Battle): Will my right hon. Friend find time for a debate on the conduct of Department of Trade and Industry inspectors' inquiries? Is he aware that questions remain unanswered about earlier inquiries—for example, those into Blue Arrow,


Guinness and House of Fraser? Is he further aware that there are questions about the circumstances in which inspectors were appointed and about the conduct of the inquiries?

Mr. Newton: I will certainly bring those matters to the attention of my right hon. Friend the President of the Board of Trade.

Mr. Paul Tyler: How soon will the House have an opportunity to examine the implications of the apparent change in stance by the Cabinet this morning on the subject of monetary union? On a separate and more detailed point, when will we have a statement on the Government's attitude to investment in the tourist industry? The promotion and development of that industry to its full potential is incredibly important to many parts of the country. Yesterday, Ministers gave me the figures relating to the reduction in the amount of money now made available to the English tourist board. It has dropped from 30p per head in real terms to just 10p, while at the same time, Scotland, Wales and Northern Ireland have increased spending on their tourist boards by 50 per cent. in real terms. That demonstrates how important they consider the tourist industry to be to their economic development.

Mr. Newton: The hon. Gentleman will have heard what my right hon. Friend the Prime Minister said on the first matter he raised, so I do not see any need to add to that.
I acknowledge that tourism is an important industry. It makes a great contribution to employment opportunities in this country as well as to foreign earnings for this country. I am sure that his desire for a debate on the subject is shared by my hon. Friends, but he need only look at today's business statement and recall the other matters that he knows will come before the House to appreciate that there is great pressure on time.

Mr. Andrew Rowe: My right hon. Friend may be aware that the Lib-Lab coalition running Kent county council is so monumentally incompetent that one of its spokesmen has said that it requires a 10 per cent. increase in real terms merely to stand still. As the confusion, anxiety and distress among the population of Kent at the proposed cuts by that incompetent coalition is so extreme and well-founded, may we have a debate on the council as a matter of urgency?

Mr. Newton: From what I hear at the Dispatch Box each week, my hon. Friend's view of that council is unanimously shared by the Members of Parliament for Kent. Perhaps they would like to group together to put in an application for a debate on the council on a Wednesday morning.

Mr. Jacques Arnold: We have.

Mrs. Alice Mahon: Will the Leader of the House make time for a debate on the Child Support Agency, which is still not working efficiently or fairly? It is causing a great deal of distress to thousands of families and also a great deal of work for Members.

Mr. Newton: I am afraid that I cannot undertake to provide time for a debate for the reasons that I have

already touched on. I draw the hon. Lady's attention to the fact that my right hon. Friend the Secretary of State for Social Security is due to answer questions on Tuesday.

Mr. Tony Marlow: In past European debates one must admit that there have been slight differences of nuance on the subject between myself and my right hon. Friend. Could we have another debate on Europe soon so that my right hon. Friend and I can debate our identity of view on what my right hon. Friend the Prime Minister has said today? My right hon. Friend would then be able to agree utterly with me that it is totally out of order for anyone on the continent to suggest that we should have a unified system of taxation in Europe.

Mr. Newton: That is a very helpful question from my hon. Friend, and I should simply like to thank him for it.

Mr. Andrew Faulds: rose—

Mr. Tony Banks: My hon. Friend is always being called these days.

Mr. Faulds: Not often enough.
Is the right hon. Gentleman aware that we must have a debate [HON. MEMBERS: "Prompt him."] I do not need prompting; I am very good at my own words. We must have a debate on foreign affairs before the Government eventually cede to the need for a general election. Is the right hon. Gentleman aware of two areas where an international crisis could break out literally at any moment, for both of which the British Government in the past have been responsible? Is he aware that in Cyprus the British Government were guarantor to the constitutional arrangements of 1960, which the Greek Cypriots aborted in 1963 and in which the Turkish forces only intervened 11 years later, as they were entitled to do under the treaty of guarantee, after the Nikos Sampson coup, which tried to bring about enosis with Greece?
Is the right hon. Gentleman aware that the other area is Israel—a fake country which was created because of the Balfour declaration promises and because of the immense American pressure under President Truman on Haiti to give the one critical vote needed to create Israel? It has depended entirely on American subvention ever since.

Mr. Newton: I can readily agree that the hon. Gentleman is very good with his own words, but there do seem to be rather a lot of them. I will bear in mind his request.

Mr. Keith Mans: Following the Government's decision to provide more opportunities for youngsters to join the cadet movement, will my right hon. Friend seek time for an early debate on the subject so that Conservative Members can reinforce their long-standing commitment to the movement—a commitment that can be contrasted to the attitude of Labour Members, particularly members of the teaching profession who have been hostile to the movement for many years? In such a debate we could also show our resistance to the proposals made by the shadow spokesman on education, the hon. Member


for Sheffield, Brightside (Mr. Blunkett), for a politically correct millennium youth movement, which will doubtless be run by social workers.

Mr. Newton: I shall bear in mind that suggestion for a debate as many important points could be made in it. I take this opportunity to pay tribute to the excellent cadet forces in my constituency which I visit from time to time.

Mr. Doug Henderson: I declare an interest as a member of the GMB. The Leader of the House may be aware that 200 workers at GCHQ have had their jobs privatised and taken over by a company called Vosper Mantech, which is to announce today that it has reached a recognition agreement with the GMB union. In light of the new situation, will the Leader of the House find time next week for a debate on GCHQ, where double standards now apply? Some 200 engineering workers and others now have the benefit of trade union recognition, which I welcome, while 4,000 other employees of GCHQ are denied that liberty. Will the Leader of the House accept that that is a priority subject and that time should be found for a debate on it?

Mr. Newton: Given the background to which I have already referred a couple of times, I am sure that the hon. Gentleman will understand that I cannot promise an early debate on the subject. I will, however, ensure that his words are studied by my right hon. Friends involved.

Sir Patrick Cormack (South Staffordshire): Does my right hon. Friend recognise that there is no more important subject for the House to debate during this Parliament than the future and structure of the United Kingdom? Will he find time, either on one of the three days the week after next, or shortly thereafter, for a full day's debate on a substantive motion affirming the integrity of the United Kingdom?

Mr. Newton: As I rather expected, my hon. Friend's suggestion has widespread support from my hon. Friends and I will give it most careful consideration.

Mr. Dennis Skinner: Why is the Leader of the House fighting shy of having a debate or a statement on the funding of political parties prior to a general election? It should be the first item on the agenda before the general election is called so that when people cast their votes they know where the money is coming from. My hon. Friends refused to support the recommendation, not because it was no good, but because it did not go far enough. We are demanding that the Tory party reveals where it gets its funds from and the Tory party refuses to say. It was £19 million in the red last year and now it is suddenly £24 million in the black. Where has the money come from? Overseas. The public should know where the money comes from before the general election. We are prepared to tell everyone where our money comes from and it is time that the Tory Government came clean.

Mr. Newton: The hon. Gentleman might be in a stronger position if his party had implemented the recommendations of the report that we have already had.

Sir Ivan Lawrence: Further to the question asked by my hon. Friend the Member for South

Staffordshire (Sir P. Cormack), has it not been an enormously long time since the House had the opportunity of debating whether, if Scotland had its own Parliament, Scottish Members of Parliament would be able to vote and decide on matters of English taxation, but English Members of Parliament would not have the opportunity of voting on Scottish taxation? Is not that matter so important that we should have debate on it very soon—or at least, before the general election?

Mr. Newton: I have already told my hon. Friend the Member for South Staffordshire that I shall give that suggestion careful consideration and I anticipate support for such a debate from the hon. Member for Linlithgow (Mr. Dalyell).

Mr. David Winnick: We can discuss political party funding on 12 February. As for next week, should not the Secretary of State for Defence return to the House early next week and explain the circumstances that have now surfaced—that the decision about the royal ship was made four months ago and the only reason for its being announced yesterday was because of the forthcoming election? Is it not unfortunate, to say the least, that the present Government—desperate to win the next election—are willing to bring the Queen into electioneering? Why should the Secretary of State for Defence have made his statement yesterday when that decision, rightly or wrongly, was made immediately after the Tory party conference?

Mr. Newton: I reject, out of hand, the suggestion that the Government are seeking in any way to bring Her Majesty into electioneering.

Mr. Nicholas Winterton: May I draw my right hon. Friend's attention to early-day motion 432?
[That this House recognises the problem caused to the Teachers' Pension Agency funding by the increasing number of teachers seeking to retire shortly after reaching the age of 50; also recognises that such early retirements are, in many cases, of value to the teacher concerned, the school and its pupils; and believes also that further bipartisan consultation is necessary before any final decision is made on teachers' early retirement.]
This relatively new early-day motion relates to teachers' early retirement and has been signed by distinguished Members of Parliament on both sides of the House. It asks that the consultation period, which officially ended last Friday, be extended. As a result of the responsible and constructive mass lobby of the House by the National Association of Head Teachers, I believe that there are good grounds for permitting further time for consultation. Will my right hon. Friend find time either for a short debate or for a statement from the appropriate Minister?

Mr. Newton: Perhaps I might draw my hon. Friend's attention to the fact that my right hon. Friend the Secretary of State for Education and Employment is due to be in the House on Wednesday next week to answer questions.

Mrs. Margaret Ewing: As the Leader of the House found an earlier question from the hon. Member for Northampton, North (Mr. Marlow) helpful, will he advise the House on whether the Foreign Secretary will


be making a statement to the House next week? We have all been told that, in the near future, he is going to make various speeches in respect of flexibility in European Community developments, yet the House of Commons is to be denied the opportunity to question him. Of particular interest to me are the issues of structural funds and cohesion funds, because, under the auspices of the Secretary of State for Scotland, the Highlands and Islands Convention will be meeting in Stornoway on 3 March and it would be helpful if we could have some form of discussion about the Government's view of those matters.

Mr. Newton: Going slightly at a tangent, I take this opportunity to assure the hon. Lady that, after the difficulties that she felt were caused on an earlier occasion, I have carefully noted the date of the next meeting of the Highlands and Islands Convention. Having said that in a helpful and friendly spirit, I have to say that I do not know of any plans for a statement to the House by my right hon. Friend the Foreign Secretary next week.

Mr. Harry Greenway: May we have a debate next week on the important subject of libraries and their great value in respect of the education and recreation of our citizenry of all ages? That will give me an opportunity to raise in the House the threat to libraries in Ealing posed by Ealing's Labour council, which threatens to close Pitshanger library and curtail services in other libraries so as to save £300,000 out of a budget of no less than £250 million, which is a record budget for Ealing. The council is incompetent.

Mr. Newton: I sometimes think that my hon. Friend's observations about Ealing borough council could occupy every Wednesday morning from now until whenever and I must confine myself to encouraging him to apply for one of the slots.

Mrs. Helen Jackson: When the Leader of the House is considering a further statement or debate on the bovine spongiform encephalopathy crisis, will he ensure that that debate or statement contains a full presentation about the disposal of BSE waste? He will be aware that it is apparent from answers in Hansard that only 3.8 per cent. or 1.1 million of all the slaughtered cattle have been destroyed. The rest are stored all over the country in warehouses and cold storage. The House has never been given a proper statement about the escalating costs of storage, transportation and incineration of that waste and it is high time the Government put it on the record.

Mr. Newton: That is certainly a matter which the House has had opportunities to question my right hon. and learned Friend about on many occasions when statements have been made. Of the many logistical difficulties of this whole exercise, the disposal question has been among the most difficult. No one has made a secret of that. I shall bring the hon. Lady's remarks to the attention of my right hon. and learned Friend.

Mr. Tim Devlin: If, as I hope, the Leader of the House is now considering a debate on the constitutional arrangements, may we include in it some reference to the progress of the English regions? People in my part of the world are now beginning to wake up to

the fact that, if we have a regional assembly in Newcastle, not only will they pay a Geordie tax to Newcastle but they will be given the crumbs from Newcastle's table when everything from London is filtered through the regional assembly sitting 40 miles away.

Mr. Newton: My hon. Friend is right to say that the confusion and dangers of much that the Opposition say on the constitution are not confined to the issues previously raised in relation to Scotland. They underline the case being made for a debate.

Mr. Tam Dalyell: On Thursday 16 January, Mr. Mohamed Al Fayed went far further on television during a "Dispatches" programme than he has ever gone before. May we have a statement next week in defence of the good name of us all? This goes beyond a party matter. The leader of the House should watch a video of what was said because the statements that were made brought us all into disrepute. It is simply not good enough for the Leader of the House to say that the matter is being looked at. It is like the Dickensian circumlocution office, because a number of the right hon. Gent's colleagues want to know whether what was said was true. If it was, something had better be done about it; if it was not, our good name should be protected. That is a duty of the Leader of the House.

Mr. Newton: The hon. Gentleman will be aware that, in one sense, his question puts me in a little difficulty because it has been the convention for many years that, as Leader of the House, I am also Chairman of the Committee on Standards and Privileges, which is examining cases that interrelate with what I understand was on the "Dispatches" programme. The hon. Member for Dewsbury (Mrs. Taylor) is also a member of the Standards and Privileges Committee and she will agree that the right course is to ensure that the Committee's attention is drawn to the hon. Gentleman's remarks so that it can consider them.

Mr. Phil Gallie: Is my right hon. Friend aware of the gastronomical and cultural disaster that faces countrymen of ours right across Europe? I refer to the haggis ban by the European Community. Is he aware that the haggis consists mainly of sheepmeat? Will he find time for a debate to discuss the merits of French frog legs and snails, or German rubber sausages, compared with the juicy, succulent haggis?

Mr. Newton: This sounds like dangerous territory for an English man to get involved in, so I shall confine myself to saying that I hope that, as normally happens to me annually, I shall have the chance to enjoy some haggis at the Burns night celebration in my constituency.

Ms Jean Corston: Will the Leader of the House find time for a debate on the subject of early-day motion 434?
[That this House notes the Government's decision to suspend the General Household Survey for 1997; notes that this survey has provided essential national information annually about how society is changing not available in such rich variety from any other source and which accounted for 27 tables selected for inclusion in the Government's own key report Social Trends 1996


covering trends in household size, patterns of family building and dislocation, contraception, school-leavers and adults with GCSE grades A-C, membership of occupational and personal pension schemes, consumer durables in the home, visits to dentists, cigarette smoking, alcohol consumption, kind of help given by carers, unpaid services given voluntarily, mobility aids for the elderly, dwelling tenure by ethnic group and occupation, tenure one year after divorce, underoccupation and overcrowding, use of car, activities in the home, and participation in sport, games and physical activities; finds that the consultation period for this decision was 20th December 1996 to 3rd January 1997, covering the Christmas period and when the House was in recess; and urges the Government to restore the GHS on a regular annual basis in 1998.]It concerns the Government's decision to suspend publication of the "General Household Survey", a unique survey of 10,000 households. In the introduction to the last survey, two major users were described the Government for policy formulation and public sector organisations for measuring change. The survey was also the source of 27 tables or sections in the 1996 edition of "Social Trends". To add insult to injury, the consultation period for that decision was 20 December to 3 January, when the House was not sitting, most people were away for the Christmas holiday and Government Departments, research and university departments were closed. Was that done because the Government do not want people to see the evidence of how people's life chances have been betrayed by the Government? It is important that we discuss the matter, so that the household survey can be restored as soon as possible.

Mr. Newton: I am sure that the hon. Lady's words will be carefully examined. I understand that the decision by the Office for National Statistics was taken in the light of an overall consideration of users' needs for social survey data. The introduction of several new household surveys in recent years means that we are now better informed than ever about social conditions.

Mr. John Marshall: Will my right hon. Friend call for an early debate on EDM 383?
[That this House welcomes the RSPCA's review of the United Kingdom's system of quarantine and rabies control; notes that the review concluded that rabies vaccines are now very effective and failure rates are minute, blood tests to check that the vaccine is effective are now standardised, international standards for microchips have now been agreed, there has been no proven case of rabies in quarantine in the United Kingdom in the last 25 years, the EU rabies eradication programme has reduced the rabies-infected area in Western Europe to only 130 square miles, Sweden, which introduced a system of vaccination, blood testing and permanent identification in 1995, has reported no health or security problems, the costs and inconvenience of quarantine lead many pet owners to smuggle animals into the United Kingdom, there are no statutory welfare standards for quarantine kennels and in a recent NOP survey, 86 per cent. of people said they would accept an alternative system to quarantine if it was scientifically proven to keep the United Kingdom rabies-free; supports the RSPCA view that a system of vaccination, blood

testing and permanent identification for cats and dogs from EU countries which are recognised by the World Health Organisation as being rabies free in those species would provide the United Kingdom with equal, if not greater protection against rabies as quarantine; and therefore calls upon Her Majesty's Government to commission a full-scale risk assessment and full economic audit to determine how a different system could be effectively implemented to maintain the United Kingdom's rabies free status.] Does he accept that the present rules in respect of quarantine for dogs are unkind to their owners, unkind to the animals and unnecessary. An early debate would be well received by both sides of the House.

Mr. Newton: My hon. Friend will know that the Government announced in November that our rabies policy was being reviewed. Work is continuing, and it would be more appropriate to consider a debate when that work has been completed.

Mr. Edward O'Hara: Will the Leader of the House find time for an urgent debate on the future of the car industry in Britain, consequent upon Ford's recent announcement that it intends to shed 1,300 jobs at the Halewood factory in my constituency? The implications are extremely serious. Apart from those 1,300 jobs, a further 3,200 jobs at Halewood may be in jeopardy in the near future, not to mention the gearbox plant there, and 10,000 or more jobs at Ford's plants elsewhere in the country. Ford, the leader in car sales in Britain, will end up importing three of the four best-selling models, at a cost of several billion pounds to the balance of trade. That demonstrates that the vaunted policy of easy inward investment, especially in the car industry, is also easy go.

Mr. Newton: While I understand why the hon. Gentleman raises the matter, and why several Merseyside Members did so last week, I should say firmly that the totality of car investment decisions taken and announced recently, including that by Nissan, makes it clear that the car industry has a good future in this country—significantly better than it had 17 or 18 years ago, when the Government came into office. The hon. Gentleman will know that my right hon. Friend the Minister for Industry has agreed to meet a delegation of local Members of Parliament, local authorities and trade union delegates to discuss further the concerns that have been expressed about Halewood.

Mr. Jacques Arnold: May I support the earlier call for a debate on the financial crisis at Kent county council? My constituents are in uproar at the proposals by the Labour and Liberal Democrat coalition running Kent county council that there should be cuts of 34 per cent. in the adult education budget, 34 per cent. in the youth budget, 3 per cent. off primary schools and 7 per cent. off secondary schools—all that at a time when the Government have made available an extra £22.5 million, which means an extra 3.6 per cent. on the funding for education. During that debate it should be pointed out that Labour finance spokesmen in the House have said that they do not need more money. Let us reflect on what would happen if the Labour party was in government.

Mr. Newton: I certainly acknowledge that the speech by the shadow Chancellor earlier this week undermines—


to put it mildly—the usual lines of argument by Labour-controlled local authorities, no doubt including Kent. As I understood the sedentary interruptions earlier, efforts have already been made to stage a Wednesday morning debate. I am sure that you, Madam Speaker, will bear in mind the obvious concern that is felt in Kent.

Mr. D. N. Campbell-Savours: Will the Leader of the House reflect on the fact that all 16 Members of Parliament in Kent are Conservatives? Will he take on board the concerns of many of my colleagues on Kent county council who are very angry about the way in which their affairs are being grossly misrepresented in Parliament by Conservative Members? They, too, want to see a debate so that the full story about the financial position of Kent county council may be revealed, their words may be heard and justice may be served in allocating money to the precious services that they are trying so valiantly to protect.

Mr. Newton: As you will realise, Madam Speaker, there is cross-party support for a debate on Kent. That will not necessarily influence the position, but I am sure that it will be noted.

Madam Speaker: As soon as I get to my office I shall look to see whether an application has been made for an Adjournment debate, as I also heard the comment from a sedentary position.

Mr. Edward Leigh: May we have a debate on the interesting idea of expanding the cadet forces? If such a debate were to take place, would the Government articulate their view that it is quite appropriate for suitable and trained youngsters to acquire military and firearms skills? Would the Government argue also that, when those youngsters leave the cadet forces, they would be encouraged to join the many institutions in this country whose constitutions state specifically that they are set up to instruct young people about firearms skills—namely, the 2,000 registered gun clubs across Britain?

Mr. Newton: I echo the words of my right hon. Friend the Prime Minister who said that participation in cadet forces gives young people the opportunity to develop qualities of leadership, responsibility, self-reliance and the like. I would want to continue to encourage such development.

Mr. Norman Hogg: May I strongly support what the Leader of the House has said. I was a national serviceman and I am very proud of the fact that I completed my two years' service—unlike a certain member of the Cabinet who ran away from his obligations to his country. We would therefore contribute to a debate with some authority, and I hope that it will take place soon.

Mr. Newton: Should such a debate take place, I would look forward to the hon. Gentleman's contribution.

Mr. Peter Luff: May I press my right hon. Friend to hold a debate on the terms and conditions of employment of public sector employees in light of the shadow Chancellor's implausible pledges on public

spending and public sector pay, and the trade unions' veiled threats of a new winter of discontent. Those threats are made all the more potent by the experience in my county of Hereford and Worcester where Unison is taking the county council Lib-Lab pact to court for the shocking mistreatment of its employees, which has prompted a leading Labour councillor, Adrian Gregson, to say that his members were better off under the Tories.

Mr. Newton: My hon. Friend makes yet another plea for what I shall call a locally directed debate. I always bear in mind such requests, but I draw my hon. Friend's attention to the possibilities that exist for debate on Wednesday mornings.

Mr. Kevin Barron: Will the Leader of the House allow time for a statement or debate about the operation of the cold weather payments scheme? The southern half of my constituency is served by the Nottingham weather station, which triggered one severe weather payment during the recent cold spell. The northern half of my constituency is served by the Leeds weather station, which did not trigger any such payments. Just over the border, the neighbouring constituency to the north is served by the Waddington weather station, which triggered two payments during the recent cold spell. People who live five miles apart cannot understand why some of them get one payment while others get two, and those in the middle cannot understand why they get none at all.

Mr. Newton: As I think I said last week in response to one of my hon. Friends, the suitability of weather stations in respect of that scheme is reviewed annually, and I am sure that the hon. Gentleman's representations will be taken into account as part of that.

Mr. Tony Banks: May I add my voice to the clamour for a debate on the cadet forces? Unlike the Prime Minister, I served my nation when at school by joining the Air Training Corps, where I became a sergeant, and I think the whole House can see the mess that it made of me. We do not need any lectures on the desirability of the cadet forces from a trio of white-feathered "jobbies" in the form of the Prime Minister, the Deputy Prime Minister and the Secretary of State for Defence. Would not it be better, if we have that debate, to encourage our children to join the woodcraft folk, so that they can learn to love their fellow creatures rather than how to shoot them?

Mr. Newton: I am left slightly open-mouthed by the hon. Gentleman's description of his youth, which appears to bear little relationship to his adulthood, except, perhaps, that he learnt the qualities of resourcefulness and endurance, which were among those on my list. There are many other excellent organisations, including the scouts and the guides and their associated groups, and many others as well, and none of us would wish to do anything other than encourage them. Before anybody asks me, I did not join the cadet force, because I went to a Quaker school that did not have one.

Mr. Gerald Bermingham (St. Helens, South): May I return yet again to my non-political subject of last week? Bearing in mind the fact that the hon. Member for Thanet, North (Mr. Gale) is shortly to introduce the Bill of the


late Lord Houghton, which twice went through the other place, I ask the Leader of the House to prevail on his colleagues to give that Bill some assistance through the House during the current Parliament, as it brings into effect many of the proposals contained in the Home Affairs Select Committee's report on dogs, and it would be both a tribute to the late Lord Houghton and a great service to the canine population of this country, which needs some protection.

Mr. Newton: I am sure that my right hon. and learned Friend the Home Secretary will take careful note of the hon. Gentleman's observations.

Mr. Paul Flynn: When can we debate the report of the Parliamentary Office of Science and Technology on nano-technology? This is the technology that will delight and provide jobs for our grandchildren and our great-grandchildren. Britain had a worldwide lead in this, yet the Government have cancelled research and broken up the nano-technology forum. Will not future generations look at this Parliament and say that we were mad, because we are spending £60 million on a symbol of the nation's pride in the last century and refusing to spend £4 million on what could be the nation's pride in the next century?

Mr. Newton: I have not had an opportunity to study the report to which the hon. Gentleman refers, but I shall ensure that I obtain a copy and look at it.

Mr. Gordon Prentice: May we have an early debate on the crisis in further education? Is the Leader of the House aware that, in my constituency, Nelson and Colne college decided yesterday to make redundant no fewer than 37 teachers and lecturers? Is he further aware that, since incorporation in 1992, one post in every five in further education has been lost? The Governments's own chief inspector said in the annual report last year that the drift towards part-time work in colleges was seriously damaging standards. If we cannot have an early debate on that, what on earth can we have a debate on?

Mr. Newton: I cannot promise an early debate, again for reasons that I have touched on several times. The hon. Gentleman will no doubt have noted that the Education and Employment Secretary is due to answer questions next Wednesday, and I shall bring that possible debate to her attention.

Mr. Stephen Day: Can my right hon. Friend advise me whether, during the business that he announced

to the House for next week, there will be an opportunity for me to raise in some detail the case of, Mrs. Sherratt, a constituent of mine who, regrettably, was shot and paralysed by an off-duty policeman while on holiday in Morocco? The Moroccan Government have refused to accept any responsibility for the actions of their police officer. I wish to raise this matter in some detail in the House.

Mr. Newton: It is obviously the sort of matter that, under certain circumstances, could be raised on a Wednesday morning. There is a great deal of pressure for such debates. Indeed, Wednesday mornings have been a considerable success. Apart from that, I think that the right course would be for me to ensure that my right hon. and learned Friend the Foreign Secretary has his attention drawn to my hon. Friend's concerns.

Mr. Dalyell: On a point of order, Madam Speaker. I hesitate to add your burdens, and I certainly make no complaint about being snuffed out during Question 4 to the Home Office, but could I ask that, over the weekend, you have brought to your attention what was said by Mohamed A1 Fayed that Thursday evening, 16 January? This is far beyond a party matter. It reflects on the good name or otherwise of the House of Commons. You, Madam Speaker, have a stake in that, to put it mildly. All I am asking is that you obtain the video and make a judgment for yourself. If you decide to make a statement, that is Madam Speaker's judgment. At least you should be formally alerted to the situation. More than a million people up and down the country saw what happened, and they were left open-mouthed.

Madam Speaker: I listened attentively to the hon. Gentleman's question to the Leader of the House a few moments ago on that matter. I am sensitive to the points that he makes, and I shall take every opportunity to defend the honour of the House. I shall reflect over the weekend on what he said. He may find that I shall come back to the House next week on those matters.

BILL PRESENTED

POLICE AND FIREMEN'S PENSIONS

Mr. Secretary Howard presented a Bill to amend the Police Pensions Act 1976 and the Fire Services Act 1947 so as to make provision in respect of transfer values and other lump sum payments and permit police and fire authorities to provide information relating to pension schemes: And the same was read the First time; and ordered to be read a Second time tomorrow, and to be printed [Bill 78].

Orders of the Day — Finance Bill

(Clauses Nos. 40, 62, 68, 82 and 92 and Schedules Nos. 7 and 13.)

Further considered in Committee.

[MR. MICHAEL MORRIS in the Chair]

Clause 40

GROUPS CONTAINING BODIES OF DIFFERENT DESCRIPTIONS

Question proposed, That the clause stand part of the Bill.

Ms Dawn Primarolo: I would have wished to move amendment No. 8. Is that not in order? May I have some guidance, please?

The Chairman: That amendment was not selected. The debate is on clause 40 stand part.

Ms Primarolo: I am grateful for that information. I can make the points in this debate that I would have made on our amendment, had it been selected. I hope that that is in order.
The notes on clauses explain that clause 40 clarifies how members of VAT groups, who have a special status, are treated, and prevents potential tax avoidance. When the Chancellor of the Exchequer made his Budget statement on 26 November 1996, he made several important points that relate directly to this clause and to a number of others. He said:
Inland Revenue tax experts will be redeployed to investigate even more rigorously how some big, sophisticated companies seem to pay so little tax. They will make sure that companies are paying what they owe, and what we"—
the Government—
intended they should owe…
There will be more resources in the Revenue and Customs to stem the growth of the shadow economy … There will be more Customs and Excise officers to tackle value added tax and other tax abuse, including … more to target the smuggling of alcohol…
The 'spend to save' package will cost £80 million over the next three years to secure … revenue and expenditure savings of well over eight times that amount—£6.7 billion."—[Official Report, 26 November 1996; Vol. 286, c. 163.]
Given the Chancellor's explicit statements relating specifically to companies, I feel that we should seek further scrutiny of the arrangements to allow VAT groups of companies. I also seek an assurance that the Government have considered the possibilities for tax avoidance that may be created by the existence of such groups. Although we do not propose that the present arrangements should be disturbed at this stage, we think that an assessment should be made, as problems have occurred in the past.
In this and previous Finance Bills, the Government have expended considerable effort on trying to close VAT loopholes, some of which have been potential loopholes rather than giving rise to significant loss of revenue. At the same time, the Government have allowed VAT group treatment to continue virtually unchanged. In discussing

the relationship during debates on previous Finance Bills, they have told us that this treatment of groups costs the taxpayer some £400 million, because VAT that would otherwise be chargeable has not been charged. Clause 40 addresses the position again.
It should be put on record that the amount of revenue that would be involved if the present arrangements were disturbed might not be £400 million for very long, because companies could reorganise themselves in order to realign their tax affairs. The withdrawal of VAT group treatment might well impose a greater administrative burden on both the taxpayer and Customs and Excise, and in that sense it would not be a sensible strategy. None the less, the arrangements should be scrutinised.
Clause 40 is designed to ensure that, when a VAT group includes a company that is entitled to zero rating or exemption as a result of some special status, that zero rating or exemption does not extend to the rest of the group. Special status companies include insurance companies, education institutions and charities. Customs describe the provisions as dealing with a potential problem. If he is in a position to disclose the information, I should be grateful if the Minister could explain the potential problem and say how much revenue may have been at risk.
Overall, clause 40 appears to achieve its objective, and seems unlikely to cause significant problems. Several universities rely on their education exemption not extending to their trading subsidiaries. The debate revolves around the loss of VAT receipts. The Government have had problems for several years in forecasting likely income from VAT receipts. It would be helpful if the Government could show that the group companies arrangement does not continue to provide loopholes.
Many clauses contain anti-avoidance provisions, which are especially important given the Minister's declared objectives. The previous Minister responsible for VAT, the right hon. Member for Wells (Mr. Heathcoat-Amory), wrote to me on the matter on 31 May 1996. I had sought an assurance on potential VAT anti-avoidance problems with the group relationships. He said:
Customs give a high priority to anti-avoidance activities. A new Headquarters branch has been set up to co-ordinate anti-avoidance policy as a response to more aggressive tax planning and marketing of avoidance schemes. Additional resources have been deployed to enable the branch to monitor and evaluate new avoidance schemes and propose measures, including possible legislative changes, for countering them. The branch is supported by a national network of Tax Avoidance officers whose role is to identify and report avoidance schemes and to provide advice to local visiting staff.
So far, so good.
Specifically, the group relationship is being examined—big companies that make tax returns individually and, in particular, companies that are grouped for tax purposes. A shortfall of some £5.5 billion has been identified—no small amount—from three possible causes. The first is a shift in consumer spending; certainly the group relationship would give an opportunity to build on that. The second is an increase in tax avoidance, or, as it is politely called, tax planning. Thirdly, it could be straightforward non-compliance and evasion—the growth of the shadow economy.
As the Government have spent so much time and effort establishing the unit and explaining the problems of VAT collection, and given the considerable press speculation,


we need more guidance from the Minister about why he does not intend to scrutinise the group arrangements more closely than is provided for in clause 40.
The issue of VAT receipts and companies' ability to minimise their obligations to pay VAT is building up considerable pressure, and not only because VAT is now set at 17.5 per cent. and is a significant revenue source. In his reply on clause 40, I should be grateful if the Minister would make a clear statement on VAT-grouped companies; on whether the Government will continue to monitor and investigate VAT relationships; on whether it may be necessary to revisit the issue of VAT groupings, on precisely which potential loophole clause 40 is intended to close, on how much revenue will be protected, and on whether alternative tax-planning strategies will be open to companies so that they can minimise payments to the Exchequer—which would only be bad for citizens.

Mr. Paddy Tipping: Clause 40 is important because it provides the Committee with an opportunity to examine the issue of tax loopholes. The clause deals with
Groups containing bodies of different descriptions
and the way in which those groups are able to manipulate VAT payments. It also sets out the way in which loopholes or potential loopholes—perhaps in the insurance industry, or for educational institutions—could be closed. The sum involved—potentially £400 million—is not insignificant.
I was impressed by figures provided in the Red Book, on page 69, on the shortfall in VAT receipts. Halfway down the page, it states:
VAT receipts in 1995–96 would have been £6 billion higher.
It also contains lengthy speculation—on which I should like the Minister to comment in his reply—on the various reasons why VAT receipts have been much lower than predicted.
The Red Book goes on to state:
VAT receipts have picked up this year, and it looks likely that 1996–97 will see the first rise in the VAT/consumer spending ratio since the late 1980s".
I should be grateful if the Minister will confirm whether that is likely to happen.
Among the various reasons given by the Red Book for VAT receipts falling so far short of predictions, one is particularly applicable to clause 40. It states:
better tax planning and increasing tax avoidance by companies
is a significant factor. The clause potentially closes tax loopholes, but it leaves it open to companies to review the situation and to indulge in reorganisation. I suspect that tax planning consultants will give advice on that matter.
There is an interesting tension in that the Minister, his advisers and Customs and Excise are engaged in combat with a group of highly paid and well-organised professionals. I do not think that they would put it in those terms, but it is the reality. It is important that the Government have the people necessary to be on the winning team.
I was particularly interested in some comments that the Chancellor made in his Budget speech. He said that he recognised that there was a problem and that some measures needed reinforcing. He talked at some length about a range of "spend to save" initiatives, and said:

As part of our continuing fight against tax and benefit fraud and tax loopholes, I am introducing a package of measures called "spend to save" … There will be more resources in the Revenue and Customs to stem the growth of the shadow economy … There will be more Customs and Excise officers to tackle value added tax and other tax abuse".—[Official Report, 26 November 1996; Vol. 286, c. 162–3.]
The Chancellor said that his proposals would cost the public purse £800 million, but would bring in eight times that amount—£6.7 billion.
I hope that the Minister will confirm that clause 40 will close the £400 million loophole, but the "spend to save" package is extremely ambitious—spending £800 million over three years to bring in £6.7 billion over three years will take a great deal of doing. I support the commitment—it is right that we should go for it—but it is an ambitious target, which, if not met, will leave a hole in the finances which will have to be filled by a future Government.
How many Customs and Excise staff will be working specifically on the technical issues of VAT avoidance? I am conscious of the fact that I am an outsider, a non-professional, but I read the financial press and I see the advertisements from and publicity surrounding VAT consultants. I am anxious about the impression given and the rewards that appear to accrue to such consultants' clients.
In summary, I support clause 40. I am pleased that the Government are closing the loophole, or the potential loophole. I believe that companies will employ experts to try to find a way around the proposal. It is right that we attempt to tackle fraud and abuse, but the targets that the Government have set themselves are very ambitious. I hope that they can be achieved, and I am pleased that resources are to be put into Customs and Excise to tackle the problem.
There seems to have been a real change in the Government's approach. In the past, they appeared content to allow Customs and Excise staff to decline in number, but there is now a change of emphasis—perhaps a recognition that civil servants such as Customs and Excise staff are valuable in dealing with this highly technical problem. I hope that the Government succeed, but I remain slightly sceptical.

Mr. Stephen Timms: I rise to support the amendment—

The Chairman: Order. If the hon. Gentleman had been here at the beginning, he would have noted that amendment No. 8 was not on the selection list; I clarified that point. I remind the hon. Gentleman that this is the clause stand part debate.

Mr. Timms: I am grateful to you, Mr. Morris, for that clarification.
I welcome the clause, because it signifies, as my hon. Friend the Member for Sherwood (Mr. Tipping) explained, a change of heart by the Government and a recognition that the hole in the VAT receipts is now the biggest threat to public finances and to control of the public sector borrowing requirement.
The clause is one of a small number of provisions aimed at improving the alarmingly poor rate of VAT collection. I hope that the 1Government will keep a close


eye on its effects of the clause. As I understand it, Customs and Excise is saying, "This is a potential problem. We do not really know why the hole has appeared in VAT collection. This is one possibility, or one contributing factor." If we are to solve the problem, it is of the greatest importance that we watch carefully the effects of the clause and the other measures that are being taken to try to put the problem right.
My hon. Friend the Member for Sherwood mentioned the "spend to save" initiative, which stands alongside the clause and is designed to try to tackle the problem. It is remarkable that the Red Book projects that, to secure about £2 billion from reduced fraud, about half a billion pounds of extra spending will be needed in social security—rather less than £200 million in the Inland Revenue, and just £100 million in Customs and Excise.
The Government anticipate that, for a very small amount of extra spending—£100 million—they will raise an extra £2 billion in VAT, which will be a welcome addition. I hope that the clause will contribute to that process. We are talking about a very small amount of extra spending, from which a large amount of extra revenue is anticipated. I hope that we shall keep the whole exercise under scrutiny to ensure that it goes in the right way, because the amounts involved are so large.
My hon. Friend the Member for Sherwood suggested that many people have been wondering why it took the Government so long to realise that the problem had arisen, and why, as recently as last May, the then Paymaster General said that the Customs and Excise review would
enable it to reduce staffing levels while maintaining or improving outputs."—[Official Report, 16 May 1996: Vol. 277, c. 567.]
Clearly, that has not been the case, and the clause may be a sign that the Government are recognising the problem and doing something about it.
The Treasury has accepted, as part of the broader "spend to save" initiative, that it should publish data on the overall achievements of the initiative, monitoring spending and savings against the published targets. I hope that, in that spirit, the Government will accept that it will be valuable to monitor what happens as a result of the implementation of the clause—to monitor whether it helps to bring in some of the missing VAT revenue and to consider whether some other initiative is required as well to crack the problem.
The Exchequer Secretary to the Treasury (Mr. Phillip Oppenheim): I warmly welcome the Opposition's support for our measures against VAT avoidance. In this bipartisan spirit, I am prepared, generously, to overlook their previous criticisms.
When we have closed loopholes, we have suddenly been accused of putting up VAT rates. That accusation was made, notably, in a leaflet produced by the Opposition entitled "Twenty-two tax increases". One "increase" was a loophole that we closed by imposing VAT on gold granules. Nevertheless, converts, however belated, are always welcome. The Opposition's support is part of their current fashion of poodling along behind us. That is something, in a generous spirit, that we all welcome.
The hon. Member for Sherwood (Mr. Tipping) asked about the current position on VAT receipts. They are 10 per cent. up over the past year on current figures,

which reflects the uplift in the economy, the effect of closing loopholes in the previous Budget, and the effect of measures in this Budget.
The hon. Gentleman also asked about the number of new staff who would be devoted to combating VAT avoidance. There will be 1,100 VAT staff, additional or retained, dealing with general high-profile cases and areas of VAT avoidance that we consider particularly sensitive. An extra 100 customs men and women will be put on specific fraud issues. That is quite a large increase over the previous estimated totals for the year.

I am also delighted that the Opposition chose this particularly high-profile clause out of all the clauses they could have chosen for debate on the Floor of the House. The hon. Member for Bristol, South (Ms Primarolo) asked why clause 40 was necessary, and whether we had any indication that there might be avoidance problems in the area it covered.
It is part of good tax management to anticipate where problems may come from, and we had some indication from tax planners and tax lawyers that they might probe in this area. There were one or two cases in which the results were a little ambivalent, so we thought that it was good fiscal management to ensure that any loophole was closed in advance, although we do not have any evidence at the moment that there is any revenue loss. We estimate, however, that the revenue protection as a result of the clause will be £50 million, which is quite a significant sum.
The hon. Lady also asked why we were not doing more than introducing the clause. The answer is that we are doing more, because clause 41 also addresses potential group abuses. Last year, schedule 9A was designed to counter most of the existing group abuses and it appears to have succeeded. Obviously, one can sometimes move in advance of loopholes and close them, but sometimes it is not possible. Loopholes sometimes become apparent unexpectedly because, as the hon. Member for Sherwood rightly said, highly paid tax accountants and lawyers are swarming over company accounts and wanting to sell their services, and they come up with wheezes. As soon as they do, if we have not anticipated the loopholes, we try to close them.
The hon. Member for Bristol, South and some of her hon. Friends went a little further, and asked why we could not get rid of the group concession altogether. She asked whether we should not scrutinise the matter more closely; I think that that was the purpose of amendment No. 8, which was not called.

Ms Primarolo: I would like to clarify that point, because I would not like the Minister to mislead the Committee. I asked whether the Government had scrutinised the question whether VAT groups, which were provided under the existing arrangements, were in themselves opportunities for avoidance. If the Minister checks the Hansard record tomorrow, he will see that I was not proposing that the groups should be disturbed now.

Mr. Oppenheim: I am sensitive to the hon. Lady's sensitivities in this area; they are very touching. The Opposition should not—[Interruption.] Would the


hon. Lady like to make that comment again at the Dispatch Box in exactly the same terms as she made it just now?

Ms Primarolo: The debate would be helped enormously if we could conduct it in a grown-up fashion. I do not wish to trade insults with the Minister, and I hope that he does not wish to do so with me.

Mr. Oppenheim: As I said, I have noted the hon. Lady's sensitivities. She stood at the Dispatch Box and was quite critical of Government policy. It is reasonable for a Minister to probe the Opposition about what their policies are and to point out that the hon. Lady said in her opening remarks that we should look at the possibility of changes to the group concessions that we have given.
My response, if the hon. Lady will listen to it rather than trading insults that she is, understandably, not prepared to confirm from the Dispatch Box, is this. We constantly scrutinise the position of groups, and where we think abuses are happening, we will close the loopholes. That is precisely what clauses 40 and 41 are about. If the hon. Lady thinks that there is scope to go further—if she will listen to the response to her question—she should make it clear to the Committee. We will make available any information she wants with regard to this matter. If it is the Opposition's policy to go further, they should make it absolutely clear.
The Government do not at the moment want to go further than closing the potential loopholes described in clauses 40 and 41, because the facility was originally introduced to provide administrative advantages, giving businesses an alternative to organising themselves on a divisional basis. The VAT position of a company organised in divisions and a group of companies should therefore be the same.
Steps could be taken to remove companies that are involved in exempt or partially exempt businesses from groups, because that is, as was rightly identified, an area of revenue loss. The likely reaction, however—it is likely in all sectors except, possibly, insurance—is that businesses and organisations will respond by vertically integrating to achieve a position similar to a single entity organised on a divisional basis. That will almost certainly wipe out any revenue gain.
It would be very difficult to argue that that is not a legitimate business move rather than a tax-avoiding move. To keep regulation to a minimum, and on the grounds that such a measure would be particularly onerous to business and especially difficult practically to act on, we have decided to go no further than the proposals in clauses 40 and 41.
The other point of which Opposition Members should be mindful is that many of the groups involved are not businesses—although some of them are in the insurance sector. Many are charities and educational institutions. That is why we are very keen to tread very sensitively.
Clause 40 clarifies how members of VAT groups who have a special status are treated, and prevents possible tax avoidance. The VAT liability of some supplies is dependent on the status of the person providing those supplies. For example, a supply of insurance is exempted only if provided by a permitted insurer. Where such a body is the

representative member of a VAT group, some tax planners have suggested, as I said, that the status should be automatically passed to other members of the group.
If that were to be so, businesses would be able to reorganise their affairs so that the VAT reliefs associated with the representative member of a VAT group could be shared by all other group members, to the detriment of the Exchequer and the public services that it finances. It would also be contrary to the original intention of grouping provisions. The measure is designed to clarify the current position, close potential opportunities for abuse, and therefore, in effect, maintain and reinforce the status quo.

Ms Primarolo: May I put on record our acceptance of the Minister's kind offer to supply us with whatever information we require during the course of our deliberations in Committee on the clauses on VAT and potential loopholes? I am sure that it will assist greatly in our deliberations.

Mr. Oppenheim: The offer that I made the hon. Lady—I can understand why she wants to expand the concession into a major loophole—is of further information on the situation regarding groups, as described in clauses 40 and 41, with a view to changing her policy to take away the group concession. We would supply any information in relation to that—

Ms Primarolo: No.

Mr. Oppenheim: More generally, any reasonable request for information will not be refused.

Ms Primarolo: Another Tory promise has already been broken. The Minister made his offer when I gave way to him during my earlier speech.
Consistency is a wonderful quality, which politicians do not always display. I remind the Minister that, in Standing Committee D on 14 March 1995, his predecessor said that there was no need for extra Customs and Excise staff, and that, as the Government, they could maintain and improve the collection of revenue with fewer staff rather than more. The Opposition are very pleased that it has now been agreed that we were right last year to say that resources were needed.
This debate is important, despite the bristling between the Minister and me, which I am sure will develop and illuminate the Committee. I hope that it will not deter us from proper scrutiny of the Bill, with which the House charges us.

Question put and agreed to.

Clause 40 ordered to stand part of the Bill.

Clause 68 ordered to stand part of the Bill.

Schedule 7

SPECIAL TREATMENT FOR CERTAIN DISTRIBUTIONS

Sir Robert Hicks: I beg to move amendment No. 10, in page 137, line 34, at end insert 'in relation to distributions made on or after 5 December 1996'.

The Chairman: With this, it will be convenient to take amendment No. 9. in schedule 7, page 141, line 25, at end insert—
'13. Paragraphs 4, 5, 6, and 10 above shall not apply to any distribution unless the transaction in securities is carried out for bona tide commercial reasons and does not form part of a scheme or arrangement of which the main purpose, or one of the main purposes, is the obtaining of a tax advantage.'.

Sir Robert Hicks: The purpose of amendment No. 10 is to clear up any confusion that may have arisen over the date of implementation of the proposed new arrangements for the tax treatment of certain distributions where a company purchases its own shares. I must emphasise that I have no quarrel with the Government's proposals for such a change in tax policy. The genuine confusion, and with it a suggestion of retrospection, was drawn to my attention by a family-owned company that has a major investment in my constituency. Indeed, it is the largest single employer.
The company acted in a totally legitimate manner under the previous arrangements, and it was not until the draft legislation was published on 5 December 1996 that it realised that the specific provisions might be applied retrospectively and a tax liability therefore imposed that could be damaging to its business and future investment plans. On the basis of clarity and equity, I ask my hon. Friend the Minister to accept the amendment.

Mr. Paul Tyler: I am delighted to support my parliamentary neighbour the hon. Member for South-East Cornwall (Sir R. Hicks). He and I share not only a boundary but the distinction and responsibility of representing the two bakeries of Ginsters Ltd., which manufactures, as everybody in the House will know, the best-known Cornish pasties in the world. The business is extremely important to us. It also manufactures a number of other products, including custard pies. I shall leave it to the House to determine whether it is appropriate that the hon. Gentleman should represent one product and I the other.
The issue is extremely important, although, as the hon. Member for South-East Cornwall said, it is very technical and appears to apply to very few people. It has the unfortunate effect of applying retrospectively at precisely the moment when the company—Samworth Brothers Holdings Ltd.—had thought that it had obtained clearance from the Inland Revenue for appropriate treatment of the business that it wished to undertake. A press release gave the business confidence that there was no problem, and it proceeded with the transaction only to find that, when the draft legislation was published, its effect was precisely the opposite of what the business and its financial advisers had anticipated.
I am delighted that the Government are minded to respond positively to the amendment, which I am sure will be welcome. As the hon. Member for South-East Cornwall said, the business is extremely important to our part of Cornwall. Indeed, it is a flagship business for Cornish products generally.
I should like to draw the Committee's attention to an article that appeared in Taxation on 2 January, which emphasised that although the issue was a minor one, it raised important wider implications. The author of the leading article said:

To my mind, if we are now entering an era in which tax rules are changed retrospectively without announcement, there is not really any point in having any rules at all in the first place. The idea of tax legislation is to tell people what tax they owe and on what date. If the legislation no longer does that, we may as well abandon our sophisticated and refined system and simply have the Revenue send round heavy boys periodically to relieve people of as much of their wealth as possible.
I acknowledge that Treasury Ministers have responded swiftly to the concerns that have been expressed on behalf of the company and I hope that the Minister will be able to assure us that problem was an unfortunate oversight rather than an attempt to get away with something that the House would deplore.

Mr. Tim Smith: I believe that the paragraph from Taxation that the hon. Member for North Cornwall (Mr. Tyler) read out is, if I may say so, a slight exaggeration. The problem is not exclusively Cornish and I have received a letter from a company in Nottinghamshire that said that its family-owned business would be severely hit by the retrospective and unannounced nature of the proposals. It continues:
Clearance had been obtained from the Inland Revenue for my Companies to buy their own shares but no mention was made of a charge on the Trustees for additional tax liability.

5 pm

Only one issue of principle arises—albeit an important one—because it was not clear, when the Inland Revenue press release was published on 8 October, that the change would take place or take place on that date. It was not clear until 5 December, by which time another Inland Revenue press release had been issued. I have always been concerned that tax legislation should not contain any element of retrospection. It is not fair on tax payers who need to have a clear understanding about the tax consequences of their decisions. They cannot do that if announcements are made subsequently about changes that will take place retrospectively. We are talking only about a few weeks but a number of taxpayers are affected and I hope that my hon. Friend will be able to respond positively to the representations he has received.

Mr. Christopher Gill: I wish to speak briefly in support of amendment No. 10. The hon. Member for North Cornwall (Mr. Tyler) quoted from the article in Taxation on 2 January 1997. Later the article says:
with self assessment being imminent … taxpayers will have to volunteer their own tax liabilities. They are far more likely to do so fairly and conscientiously if they consider that the tax regime is itself imposed by fair and proper means.
That brings me to the point made by my hon. Friend the Member for Beaconsfield (Mr. Smith) about retrospection in tax legislation. There should be no retrospection in tax legislation, otherwise none of us knows where we are and nobody can make their tax planning dispositions.
Samworth Brothers is one of the most pre-eminent companies in the food manufacturing industry in this country. Mr. Samworth, whose letter was mentioned by the hon. Member for North Cornwall, won this year's Massey-Ferguson award for agriculture and gave a most impressive presentation when he accepted that award. He demonstrated how his company, which I have known of for many years, has grown and grown to become a pre-eminent company in the meat industry. It provides a


good example to many other British companies. I have no doubt that the company's planning of its financial and tax affairs has been involved in its success story.
I hope that the Minister will agree that it would be wrong for the House to act retrospectively and I hope that he will accept the amendment.

Mr. Mike O'Brien: I hope that it will be for the convenience of the Committee—if you agree, Mr. Morris—if we have a wide-ranging discussion on the amendments and also schedule 7. In that case, we would not have to have a separate stand-part debate.

The Chairman: The Chairman is here to serve the Committee. We should have discussed that point at the beginning, but if all parties are happy for the general principle of schedule 7 to be incorporated in this debate, I am happy.

Mr. O'Brien: Thank you, Mr. Morris.
Amendment No.10 deals with the issue that arises in relation to cornish pasties and pork pies and the Minister must address it. There have been complaints not only from Samworth Brothers but from organisations such as the Law Society. I suppose I should declare an interest because I am a member of the Law Society, but I have no other interest in the matter. The Inland Revenue press releases appear to have misled certain people—innocently, I am sure. The Inland Revenue press release of 8 October 1996 said in paragraph 1 that
the income tax liability of taxpayers who receive such distributions will be unaffected by the change.
The second press release, on 26 November, went further and it said:
the income tax liability of taxpayers who receive such distributions will be largely unaffected by the change.
The significance of the insertion of the word "largely" became clear only when the draft legislation was published on 5 December and it became clear that it will impose a new tax liability on trusts.
The Minister should explain the sequence of events behind the press releases. Why was it not made clear on 8 October that the Minister and the Inland Revenue intended to take the course of action that they later took? As a result, certain people arranged their tax affairs in a particular way and might, as a consequence, face a liability that might not have arisen if the Inland Revenue had clearly indicated what it intended to do. I hope that the Minister will deal with that issue today.
More broadly on schedule 7, share buy-backs and special dividends have been identified as a problem for some time. Much credit must go to my hon. Friend the Member for Dudley, West (Mr. Pearson), who has repeatedly pointed out to the Chancellor, in a series of letters and parliamentary questions, the abuse of the system of share buy-backs and special dividends. I pay tribute to my hon. Friend for recognising the problem and putting pressure on at an early stage to ensure that the Treasury also recognised the difficulty. When my hon. Friend raised the issue in March with the Financial Secretary, he provided reassurances. In a letter to my hon. Friend, the Financial Secretary stated:

The availability of a tax credit on a special dividend is not a tax loophole.
That begs the question of why the Government are now taking action. The definition of a tax loophole is a technicality, but surely creating opportunities for streaming is a loophole for all practical purposes.
The media became agitated by the way in which special dividends and share buy-backs have been used and major company takeovers that resulted in special dividend payments have highlighted the issue of tax-exempt shareholders receiving tax-exempt credits at the expense of the taxpayer. Articles in The Times and in the Lex column in the Financial Times have brought the inconsistencies in the system to public attention. In The Times on 18 August 1996, Graham Sargent wrote:
Since the beginning of 1995, buy-backs have totalled some £4.8 billion. Those buy-backs cost the taxpayer more than £1 billion in tax subsidies in just 20 months.
Another example of these arrangements is Granada's bid for Forte, the loss to the taxpayer from which has been estimated at roughly £40 million. Special dividends have been widely used in the circumstances, and there are a number of estimates as to the total lost by the Inland Revenue during the past year as a result. I hope that the Financial Secretary will be able to state how much has been lost. It is right for the Treasury to examine this area as a tax issue, and we welcome the Government's decision to make changes to the treatment of share buy-backs and dividends. Our concerns are twofold: why did the Government not do this before, and why are they doing it in this way?
I shall return to a number of issues arising from the wording of the schedule in a moment. The amendment seeks to restrict access to exemptions to bona fide commercial arrangements and not those set up merely to avoid taxation. There may be circumstances in which share buy-backs and special dividends have market benefits, but the issue is whether they should be used merely to avoid tax. A legitimate use, for example, might be when a mature company with cash to spare has insufficient good investment opportunities. In such circumstances, it may be better for the surplus to go to the shareholders, who may divert it to other companies which could use the surplus more effectively.
A difficulty is that the tax rules regard dividends and share buy-backs as essentially the same thing, and treat them as the distribution of capital from a company. Companies are currently required to pay advance corporation tax on distributions at a rate of 20 per cent. on the gross dividend or 25 per cent. on the net dividend, which is the dividend paid less the ACT. Shareholders receive a dividend from the company together with a credit for the ACT paid, and UK taxpayers will pay tax on the gross dividend and can use the tax credit to offset their tax bill. Shareholders who pay income tax at the basic and lower rate pay no further tax on the dividend, and higher rate taxpayers pay an extra 20 per cent. on the gross dividend received.
Pension funds and other tax-exempt institutional shareholders may reclaim the ACT paid on dividends from the Inland Revenue by, in effect, cashing in their credit. In the financial year 1995–96, the Inland Revenue collected £23.6 billion in corporation tax, of which £9.9 billion was ACT. Tax-exempt pension funds and other institutional investors are the largest investors in UK


equities or shares, so a substantial proportion of the ACT paid will be reclaimed. That will reduce the tax yield to the Inland Revenue.
The Government proposals in the schedule will have the effect of preventing shareholders from claiming back ACT where their company has paid it as part of any share buy-back, or as dividends paid in more limited special cases. A fundamental principle of UK company law, and of tax law as it applies to companies, is that all shareholders should be treated in the same way. However, prior to the Government's decision to deny the reclaiming of tax credits, various UK companies were engaging in schemes or arrangements where most of the shares offered for buy-backs were purchased by tax-exempt institutions. This practice is often referred to as streaming, and offends the principle of equal tax treatment for all shareholders. It also applies in many ways to special dividends.
The Lex column in the Financial Times on Wednesday 10 January 1996 reported:
Granada's increased bid for Forte includes a helping hand from the Inland Revenue. The 47p special dividend Granada is proposing to pay from Forte's balance sheet comes with a 11.75p tax credit for tax-exempt institutions such as pension funds. These shareholders—who will determine the bid's outcome since they account for perhaps 50 per cent. of Forte's shares—will receive an extra £50 million or so from the Revenue if the bid succeeds.
The column continued:
No public interest is served by a loophole that involves taxpayers subsidising corporate raiders.
The timing of the Government's initial announcement in October was prompted by a transaction proposed by Reuters that involved the creation of special shares which could have cost the taxpayer an estimated £150 million. However, instead of dealing directly with the problem of streaming, the Government have denied the reclaiming of tax credits on all share buy-backs, irrespective of whether the shares have been streamed or not. The rules are mandatory, and the Inland Revenue seems to have no discretion as to how to apply them.

The clause is broadly defined, and there is some danger that the innocent may be caught with the guilty. I hope that the Minister can assure us about the way in which the scheme will be enforced. The scheme may affect company reorganisations and will create another layer of complex fiscal detail. Fiscal detail is sometimes necessary, but we should be careful not to indulge in the creation of fiscal detail for the sake of it, and full explanations will be needed from the Treasury. Companies will have to contend with complex provisions when they arrange their corporate financial affairs as a result of the schedule. It will provide income for lawyers and accountants, but may in effect frustrate many bona fide financial engineering projects within the City.

Mr. Tim Smith: What point is the hon. Gentleman trying to make? Who is he saying should decide whether a "financial engineering project"—as he described it—is bona fide or not?

Mr. O'Brien: My point relates to the provisions contained in section 703 of the Taxes Act 1988, which allowed the Inland Revenue to deal with issues of tax avoidance. The Revenue can look at particular

mechanisms and ask whether they are geared towards tax avoidance or towards dealing with genuine commercial arrangements with a practical benefit. Why did the Government not get the Inland Revenue to look at whether the arrangements were bona fide? There may well be good reasons for that, but it remains to be seen whether the Minister can provide a justification for the course that has been taken. The House has a right to hear such a justification.
The Government have provided exemptions to clause 68 but have not sought to distinguish between bona fide operations and any abuse of the exemptions. Why do the Government believe that those in the City who, in a sense, abuse the current system will not abuse the proposed system by, for example, exploiting the exemptions for preference shares and pre-sale distributions? I hope that the Minister can reassure us on that.
The amendment denies the benefit of the exemptions to transactions that do not have commercial justification. Each case would be considered on its merits, and the Inland Revenue would be able to exercise discretion. Where the Inland Revenue and taxpayers agree, both would have recourse to the courts which would decide on the facts and the law in each case. The Red Book forecasts that the Government will save £200 million in 1997–98, rising to £400 million in 1998–99 and 1999–2000. The amendment might provide a little extra help for the taxpayer by increasing resources. It is difficult to gauge precisely how much will be raised, but ensuring that the exemptions are used only for bona fide purposes seems to be a good way to proceed.
I have a series of questions to which I hope the Minister can give me some answers. Why have the Government taken so long to tackle the problem? They knew about the special dividend issue when it arose in bids for several electricity companies back in 1995, as well as in the Lloyds-TSB merger. Surely the Minister could have acted to deal with the matter in the 1995 Budget. Why did it take a further year to take the necessary action? Surely the Treasury must have thought about it during the intervening period, so why did a subsequent complication arise as a result of the various press releases that were issued? That complication had a detrimental effect not only on Ginsters and Samworth Brothers, but various other people have complained to their accountants that they did not realise what would happen.
Even if action was not taken in the 1995 Budget, the Chancellor was aware of the abuse. Why was it not possible to use the powers in sections 703 to 709 of the Taxes Act 1988 to challenge the tax advantages from special dividends in takeovers? The respected Stephen Edge of Slaughter and May wrote an article in The Tax Journal on 10 October 1996 in which he questioned whether the current changes were necessary. He thought that section 703 of the 1988 Act enabled the Inland Revenue to act. Will the Minister clarify the position with regard to that section and explain why it was impossible to use it to deal with the issues that arose in various takeovers?
Why is schedule 7 so widely drawn? Why has it not been possible better to target the abuses? Accountants and lawyers will do very well as they work out the meaning of paragraph 1(3)(a), especially the meaning of
was … referrable (in some way and to any extent) to, or to the carrying out of, a transaction in securities".


Is it the intention that United Kingdom tax exempts should never qualify for ACT refund on share buy-backs? Are we not left with a complex schedule with an uncertain meaning? Will the Minister confirm that the legislation requires to say on the dividend voucher whether the distribution is affected by that legislation? That may prove difficult.
The schedule may create uncertainty because the scope of the wording is too complex and difficult to understand. It requires that companies should prejudge the outcome of any difficulty or complexity before they can issue any dividend. A company is prevented from paying up and arguing later with the Inland Revenue about whether it is covered by the schedule. If that is so, it is likely that mistakes will be made.
Are we not in danger of creating an extra burden on businesses, many of which are not large but may still be affected by the terms of the schedule? Should we not have dealt with the issue of complexity with more care?
A judgment must be made about the dividend voucher before the dividend is issued. What is the penalty for getting it wrong? I have been unable to discover it, but perhaps the Minister can let us know.
The Labour party strongly supports action to tackle the abuse of share buy-backs and special dividends for the purposes of tax avoidance. My hon. Friend the Member for Dudley, West deserves credit for repeatedly warning the Treasury about that abuse. We are concerned about the Government's failure to act earlier and the complexity of the method used to tackle the problem. The schedule adds yet a further layer of complexity to an already complex system of corporation tax. It follows other fundamental changes to the imputation system, which have been passed in recent years, such as the decoupling of ACT and the basic rate of income tax and the introduction of foreign income dividends.
The system will become yet more complex because of the schedule and because the income tax and corporation tax structures have changed significantly since the introduction of the imputation system in 1993. Is it not therefore time to consider whether we can simplify that complex system as soon as possible?
I should like to ask the Minister a few questions of a more technical nature, although I accept that he may be unable to answer them immediately. If so, perhaps he can write to me and ensure that those answers are published because the current proposals have led to a number of confusions. Can the Minister confirm that foreign recipients will not be able to claim tax credit repayments on the double taxation agreements? If so, can the Minister explain why such shareholders would be affected in that way?
Can the Minister say whether the words "made to" in paragraph 1(3) in relation to the scope of special rules for trustees referred to in sub-paragraph (4) mean that the provisions apply to bear trusts and not to just to qualifying distributions belonging to the trustees? As for the meaning of payment, can he explain whether the term "payment" in paragraph 1(2) covers payments in kind as well as payments in cash? That uncertainty might create an opportunity for abuse, so I hope that the Minister can clarify that.
As for the meaning of arrangements in paragraph 6(2), can the Minister explain whether the word "arrangement" means any agreement or understanding whether or not it is legally enforceable? On the extent of transactions in securities, can the Minister explain whether the phrase "transaction in securities" in paragraph 1(3)(a) could include the payment of the dividend? Can he clarify the meaning of the words "by virtue of which" and "made referrable to" in paragraph 1(3), which seem to add to the confusion? Can the Minister cite some examples to illustrate the strength or laxity of those important connecting words?
On the scope of exclusion for pre-sale dividends, can the Minister explain the basis of the 14-day limitation in paragraph 6? Why should a dividend that is paid more than 14 days before a sale be regarded as more offensive than one that is paid within that 14-day window? That difference may be academic, but we are here to clarify such details. It is important that we do so because a lot of people will read the answers in Hansard.

The Financial Secretary to the Treasury (Mr. Michael Jack): We will be here all night.

Mr. O'Brien: I hope not.
The schedule also has the odd effect that the longer the time the dividend is paid prior to sale, the more likely it is to be safe. It will not be referrable to the later sale. As the time lapse shortens, the risk gradually increases, until at 14 days it suddenly drops to nil. That does not seem logical. I appreciate that the Minister may not be able to deal with all those questions, but I want to place them on record so that answers are given to aid those who will have to deal with the issue later.
Can the Minister advise us whether for the purposes of relief as set down in paragraph 6, it is necessary that the sale should have been completed by the end of the 14 days?
We have sought to clarify the meaning of a complex set of provisions. We also want to strengthen them. The Government are tackling the right issue, but we have doubts about their methods. The Minister must answer some important questions about the effects of the press releases. The points that were raised by the hon. Member for Beaconsfield (Mr. Smith) are important and I hope that the Minister will be able to deal with them. He must deal with those problems—and not just in terms of retrospective legislation. There is also the question of the press releases and whether or not the Inland Revenue properly clarified what it intended to do.
If the Committee wishes, I shall later move amendment No. 9 formally and seek to commend it as one that will add strength and clarity to the schedule.

Mr. Ian Pearson: My speech will fall into three parts: first, schedule 7 and the general principle behind it; amendment No. 10; and, finally, amendment No. 9.
Clause 68 and schedule 7 tell a story—

The Chairman: Order. We have finished with clause 68 and are now debating schedule 7.

Mr. Pearson: Thank you, Mr. Morris.
Schedule 7 tells a story that I have been highlighting, as my hon. Friend the Member for North Warwickshire (Mr. O'Brien) said, for well over a year. It is the all too familiar story of Government dithering, denial and delay followed by climbdown and belated action. That is pretty much par for the course with this Government, but what marks out this case is the fact that their negligence has cost the hard-pressed taxpayer, by my calculation, £1.75 billion in lost revenue, and possibly more.
On the face of it, schedule 7 provides a number of technical amendments to be made to the treatment of certain distributions by companies. They apply to purchases by companies of their own shares and other distributions, mainly special dividends, which are linked to transactions in securities. The decision to make the changes was sneaked out on 8 October—no doubt coincidentally, but certainly conveniently, during the Conservative party conference. It did not, therefore, receive much publicity; it would probably not have received much coverage anyway. The subject of the operation of the imputation system of taxation and its effect on tax-exempt institutions does not interest the average person in the street and would not grab the imagination of the popular press, but if the story had been headlined, "Ken throws away nearly £2 billion of taxpayers' money"—which is what has happened—perhaps the tabloids would have been interested.

Mr. Tim Smith: The hon. Gentleman has twice said that there has been a huge haemorrhaging of revenue. Does he agree that, if the rules that are now proposed had been in place, the companies would not have behaved in the same way? It is unrealistic to think that, if there is a major change in the law, it does not influence people's behaviour. It is nonsense to suggest that a great deal of revenue was lost.

Mr. Pearson: Surely the hon. Gentleman is aware that the estimated cost savings—on the Treasury's own assumptions—to be made from introducing the Bill will be £200 million in the next financial year and £400 million the year afterwards. Substantial savings are predicted even if people's behaviour has been modified as a result of the change.
If the headlines had been, "Ken throws away nearly £2 billion of taxpayers' money", the tabloids would, rightly, have been interested in what happened. The sum being thrown away by the Government is the approximate equivalent of 1p off the basic rate of income tax—or about the total amount that has been given out in grants to good causes since the national lottery began. That money has been needlessly squandered by the Government when it could have been well spent on improving education and the health service.
We are talking about an abuse of the taxation system or, put differently, a tax loophole—something that the Chancellor always denies exists, but later takes action over. The loophole has been consistently pointed out to the Government by the Opposition. In this instance, it consists of a range of smart schemes that have been drawn up by corporate financiers and which favour the big pension funds at the expense of other shareholders. It has cost the taxpayer millions each time for each deal and it has distorted competition in takeovers.
The loophole was becoming known when the 1995 Finance Bill was passing through the House of Commons, and it was apparent long before the drafting of the 1996

Act. Selective share buy-backs were increasingly used by large companies through 1995 and, as my hon. Friend the Member for North Warwickshire said, the use of special dividends was common in the water and electricity industries. Special dividends were also used in other situations, such as Lloyds bank's bid for TSB and, more recently, Granada's takeover of Forte last year.
It has already been mentioned that many respected financial commentators, such as Lex in the Financial Times and Graham Searjeant in The Times, graphically pointed out the abuse. On 10 January last year, the Financial Times, not for the first time, talked about
the special dividend wheeze and its close cousin the share buyback".
It said that
no public interest is served by a loophole that involves taxpayers subsidising corporate raiders.
Labour Members, both here and in the other place, highlighted the abuse. I tabled a number of parliamentary questions on special dividends and raised the subject on the Second Reading of the Finance Bill. I even went so far as to table amendments to the Bill to alter sections 703 to 706 of the Income and Corporation Taxes Act 1988. That was a clear sign to Ministers that something was wrong, but no attention was paid and the scandal of the abuse of share buy-backs and special dividends was allowed to continue.
The Government's response was to deny the problem. The Financial Secretary to the Treasury, who has unfortunately slipped out of the Chamber for a moment—he probably has an inkling of what is to come—in a parliamentary answer dated 1 February 1996 said:
The payment of a special dividend does not involve a tax loophole."—[Official Report, 1 January 1996; Vol. 270, c. 862.]
Owing to the Minister's dithering and denial, the use of share buy-backs and special dividends escalated. Figures from Kleinwort Benson demonstrate that quoted companies cut their equity capital by £3 billion from the start of the last calendar year to the end of July alone through selective buy-backs.
The cost to the Exchequer has been an estimated £750 million. That loss could easily have been avoided by a half-competent Government. So, too, could the £50 million or so that the Revenue had to pay to subsidise Granada's takeover of Forte, not to mention the money paid in other special dividends.
In The Times on 19 August 1996, Graham Searjeant expressed the hope that
even at this late stage, the Chancellor might be stirred from his supercilious lethargy to take some action in his autumn Budget.
If the Chancellor read that article—no doubt, while he was on the beach—it took him until Tory party conference week to act. Typically, he blustered his way through the climbdown, conveniently forgetting what had happened before.
The Inland Revenue press release of 8 October 1996 quoted the Chancellor as saying:
We have seen recently companies buying their own shares or paying special dividends in such a way that the proceeds end up entirely in the hands of those who are entitled to payment of a tax credit. This has costs for the Exchequer, and if action is not taken soon that cost would escalate.
That was the issue of streaming mentioned early by my hon. Friend the Member for North Warwickshire.
In the press release, the Chancellor said:
we will not hesitate to take any further action should further evidence of abuse appear.
At least he finally admitted that it was an abuse—a tax loophole exploited by companies and their advisers—and, in so doing, he directly contradicted the Financial Secretary who has said all along that it is not a tax loophole. Perhaps he will now apologise and admit that he got it wrong.
During the debate on the Loyal Address, I challenged the Government to publish their figures on the cost to the Exchequer of allowing the loophole to remain open for so long. I had to follow up my inquiry with a parliamentary question, which was due to be answered on 7 November but was not answered until 2 December—and even then it contained an error. That shows just how unwilling the Government have been to tell the truth on this matter.
The answer from the Financial Secretary used the same method of calculation as that used for the estimated cost savings projected from closing the tax loophole, which produced an estimate of the total cost to the Exchequer of £400 million in the financial year 1995–96 and £450 million in the period from 1 April to 8 October, when the Inland Revenue announcement was made. There we have it—the Financial Secretary admitted that the cost to the Exchequer was a total of £850 million over a period of less than two years.
I believe that that is a gross underestimate and many respected commentators agree. On 9 October, the day after the press release, The Times made what I think is a wonderful comment on the Chancellor's decision. It said:
The only fair complaint against the Chancellor's attack on the gross dividend scandal is that it has taken him at least a year too long to close a loophole so large that it must be visible from outer space.
It went on:
The Inland Revenue, so deft at plucking numbers from the air, reckons yesterday's change will eventually save £400 million a year.
That is the figure still quoted by the Government today. However, The Times pointed out:
share buybacks in 1996 alone appear to have attracted about £750 million in tax subsidies. Over two years, buybacks and special dividends paid in takeovers have probably extracted £1.75 billion from taxpayers.
The staff of The Times know a few things about goings-on in the City, and they should be listened to.
I simply do not believe the figures quoted by the Financial Secretary, nor do I accept that the long overdue changes that are to be made will yield only £200 million in 1997–98 and £400 million from 1998–99 onwards. In my view, the yields will be substantially higher than that, which will be good news for a future Labour Government.
Who will take responsibility for losing taxpayers' money on such a grand scale? Nobody, it seems. That comes as no great surprise, even though the financial director of a public company who was this incompetent at managing the business's finances would be dismissed as soon as blunders on such a large scale came to light. We have to ask, who took their eyes off the ball? Was it the Chancellor? Was it the Financial Secretary? Should everything be blamed on the hapless civil servant who

undoubtedly gave the Financial Secretary bad advice when he was replying to my question? The taxpayer deserves some honest answers.
The Government's failure to act speedily in the face of the growing scandal of share buy-backs and special dividends exposes as a myth Tory claims to economic competence. When he gave evidence to the Treasury Committee on 9 December 1996, the Chancellor tried to gloss over the Government's negligence in not acting sooner. According to him, the Government acted speedily. He said:
The particular announcement was timed because the nature of share buy-back was changing at the time and a whole new type of share buy-backs was being devised which in our opinion was not consistent with the purposes for which the previous regime was devised. That was a classic case whereby an allowance or tax arrangement was used for one purpose for a very long time and then suddenly with great ingenuity people found a new way of taking advantage of the tax relief. It is not at all unknown for the government to move quickly, we would have been criticised if we had not, to stop this.

I am not sure what planet the Chancellor was on when he claimed that the Government moved quickly. Eighteen months previously, it was quite well known in the financial community that such arrangements were an abuse of the tax system. One could talk to any corporate financiers of repute about the issue and they would say, "Well, yeah, it probably is an abuse of the tax system, but we're allowed to get away with it." They all thought that it was a loophole and one that would certainly be closed—not in this Budget, but in the one before.
I shall now consider amendment No. 10, which I support. It should be clear from my remarks that I do not approve of share dividends and share buy-backs being used as a tax wheeze; however, I do believe that retrospection of taxation is an important issue and one that the Minister should address. I hope that he will take the amendment seriously—indeed, I understand that he might do so.
It is not only one prominent company in Cornwall that will be affected by the proposal. A company called The Birmingham Guild Ltd., which is based in Netherton—which is not in my constituency, but which I hope, with boundary changes and after a short general election campaign, will fall comfortably within it—wrote to me about tax-saving measures in respect of companies buying their own shares or paying special dividends. The letter says:
Our Company, The Birmingham Guild Limited, has over the past few months been involved in certain transactions for bona fide commercial reasons. These transactions have involved the purchase of the Company's own shares from Trustees of family Accumulation and Maintenance Settlements. We have been advised in these transactions by Messrs Coopers and Lybrand who applied for tax clearances on 13 and 24 September 1996"—
before the Chancellor's announcement—
and such clearances were duly received in October 1996. The retrospective nature of the legislation adversely affects the transactions we have entered into in good faith and in the light of the legislation prevailing at the time.
The company is clearly being penalised as a result of proposed legislation that was rather woollily outlined on 8 October and only inadequately clarified in December.
The letter goes on to quote a number of reputable sources and highlights the interest shown by the chairman of Coopers and Lybrand and by Deloitte and Touche, which has also contacted the Inland Revenue in respect of this issue. The letter concludes by saying:
I hope you will agree that the retrospective nature of the proposed legislation is quite unacceptable in breaking as it does a long established principle and is absolutely contrary to natural justice. Your help in addressing this matter will be appreciated.
I wanted to read that because it is important for the Committee to realise that the Bill affects real businesses in the black country as well as in Cornwall. We should therefore consider accepting amendment No. 10.
Amendment No. 9 seeks to withdraw the allowance made in paragraphs 4, 5, 6 and 10 of schedule 7 if transactions are not carried out for bona fide commercial reasons. The Minister must look seriously at this matter. It was clear to me when I sought to amend sections 703 to 706 of the Income and Corporation Taxes Act 1988 last year that those sections could not easily be used to stop streaming. That may be why the Government have adopted such an approach in schedule 7 rather than making a simple alteration to that Act.
However, it is a clear principle—I suspect that the Minister will use it as a reason for opposing the amendment—that "bona fide commercial reasons" is an accepted term in law and is referred to in sections 703 to 709 of the 1988 Act. That Act relates directly to schedule 7, as it provides that if a
transaction or transactions were carried out either for bone fide commercial reasons or in the ordinary course of making or managing investments, and that none of them had as their main object, or one of their main objects, to enable tax advantages to be obtained",
tax advantages gained can be counteracted. I hope that that is clear.
The amendment is similarly clear about how we would expect it to operate in law. Section 703 of the 1988 Act could apply to a takeover bid involving the offer of a special dividend but that would depend on two further requirements: first, the obtaining of a tax advantage and, secondly, the absence of a bona fide commercial defence.
In the case of Shepphard and another, trustees of the Woodland Trust, v. Commissioners of the Inland Revenue, members of a family who were also trustees of a charitable trust decided that the trust should be financed by dividends. The company issued bonus shares, which were announced in favour of the trust. The family then renounced the right to a dividend in favour of the trust, and the company paid the dividend to the trust. As a non-taxpayer, the trust was able to claim back the advance corporation tax paid by the company on the distribution. The Inland Revenue sought to deny the claim for repayment, relying principally on section 703 of the 1988 Act, and said that the right to claim repayment of the advance corporation tax was a tax advantage.
That was accepted in the High Court, where Mr. Justice Aldous held that the ability to claim the advance corporation tax paid by the company on the making of the distribution at a later stage on appeal was not a "tax advantage" for the purpose of the provisions, having regard to the statutory definition. He said:
The whole idea of a tax advantage is that the taxpayer has done something which allows him to resist an assessment and the Inland Revenue can point to something which alters his position to his advantage.

That ruling followed the words of Lord Wilberforce. It is significant to amendment No. 9, which refers to "bona fide commercial reasons" and
the obtaining of a tax advantage".
I was not surprised that the Government rejected the amendment that I sought to table last year to sections 703 to 706 of the Income and Corporation Taxes Act 1988, but I am surprised that they have not sought to go down that route themselves in their rather complicated schedule 7. I support the principles behind the schedule, but remain to be convinced whether it is effectively drawn. I suspect that clever tax accountants will still find ways to get round it.
The schedule misses the target of special dividend shares that do not require consolidation, and does not establish a level playing field for takeovers. Will the Minister clarify that, because it is an accepted principle that there should be a level playing field for takeovers in terms of the tax system. Whereas the old system offered corporate raiders a tax advantage by allowing them to make a special dividend payment from the target company on a successful takeover, schedule 7 will shift the bias from favouring the bidder to favouring the target company, which will be able to take account of certain tax advantages not available to the bidding company. I suspect that, for that reason and many others, we shall return to the matter in future Finance Bills.
I support amendments Nos. 9 and 10 and hope that the Minister will consider them favourably.

Mr. Stephen Timms: I wish briefly to put three specific questions to the Minister. First, why have the Government taken so long to stop this abuse? The original announcement of the proposals on 8 October last appeared to be linked to Reuters' proposed special dividend, but the Government could have acted much earlier. Special dividends were used in the bids for a number of electricity companies in 1995 and by Lloyds bank when it merged with the Trustee Savings bank. The Chancellor could have taken action before the 1995 Budget. My hon. Friend the Member for Dudley, West (Mr. Pearson) tabled an amendment to the Finance Bill following that, and the Government did not act. If those bids were not enough, Granada's bid for Forte should have made the Chancellor sit up and take action no later than January 1996.
My hon. Friend the Member for Dudley, West mentioned what Graham Searjeant said in The Times on 22 January 1996. The problem was well known more than a year ago, so I want to know why the Government are taking so long to deal with the abuse.
Secondly, why did the Inland Revenue not use existing anti-avoidance legislation to tackle the problem? As a number of hon. Members have said, the powers in sections 703 to 709 of the Income and Corporation Taxes Act 1988 exist to allow the Inland Revenue to cancel tax advantages from certain types of transactions in securities. The growth in the use of special dividend and buy-back schemes was probably prompted by the Revenue's apparent unwillingness to use those existing powers.
Stephen Edge wrote in The Tax Journal on 10 October, referring to the proposal that we are debating:
This is probably an unnecessary change if the provisions of s703 were applied properly and it is somewhat puzzling that the Inland Revenue has not responded to the press clamour by saying that it already had adequate weapons to deal with this abuse.


Thirdly, why has the schedule been so widely drawn? Why does it not target the problem that has been identified? As it is drawn, it could catch almost any dividend, as Stephen Edge noted in The Tax Journal. The schedule is riddled with complexity and uncertainty, and clever people will probably find ways around it.
Those are my three questions to the Minister: why did the Government wait so long, why was the existing legislation not used by the Inland Revenue, and why has the schedule been drawn so wide?

6 pm

Mr. Martin O'Neill: When we are dealing with a Government changing tack, there is always a tendency for us not to adopt the generosity of spirit implicit in the Bible when it says that there is rejoicing in Heaven over one sinner that repenteth.
Ministers always start their speeches in debates such as this by telling us that the Government have changed and that they have listened to what people have been saying. I would respond to that with the words that, as a schoolteacher, I used to write on essays, "Not good enough. Try harder." We are trying this evening to give the Minister the chance to do a little better.
The Government—inept as they may be—have recognised that for 20 months there has been a massive leakage of potential revenue. The ability of predatorial companies to make use of loopholes, and the impact of that on potential revenue, was recognised even by the Government as a matter on which they had to act.
We should all be grateful to my hon. Friend the Member for Dudley, West (Mr. Pearson), who has worked hard to highlight company excesses. We are entitled to claim credit for the Opposition's effectiveness in drawing attention to the shortcomings.
We must find out why the Revenue felt unable to use sections 703 to 709. If those provisions were not appropriate, that is a reasonable defence. It would not be unfair for the Government to accept that. The problem is that several tax experts are of a different mind: they say that the provisions could have been used and that, if the Revenue had applied its ingenuity to the problem, it could have had a go. Even if its attempts had failed, the fact that the Revenue was trying would have deterred some of those who were trying to take advantage of the loophole.
It is not good enough for the Government to claim that on the dawn of 8 October a new world was in prospect, another avoidance scandal was about to break and that, as a consequence, they had to act. Even this wretched Government probably recognised that they could not afford to ignore the issue any longer, so they drafted the measure. Unfortunately, they have botched it again. It is such a blunt instrument and is so widely drawn that it could pull into the provisions certain activities that are quite legitimate.
Amendment No. 9 is more explicit. It states:
Paragraphs 4, 5, 6, and 10 above shall not apply to any distribution unless the transaction in securities is carried out for bona tide commercial reasons and does not form part of a scheme or arrangement of which the main purpose, or one of the main purposes, is the obtaining of a tax advantage.
A culture has developed over the past 17 years—it has assumed the proportions of an industry—that legislation should be framed in such a way that individuals can obtain

tax advantages. Schemes are offered by the City to enable individuals to benefit as a consequence. That should not be the purpose of legislation. If there is to be distribution, it should be for bona fide commercial reasons.
The Minister cannot complain about our amendment. When the Opposition draft amendments, they are advised by skilled draftsmen, but those draftsmen do not have the authority of the Treasury or Inland Revenue solicitors. Amendments are often defective, but the wording of amendment No. 9 is clear and specific. The words are part of everyday parlance in the circles in which those matters are considered.
The Minister cannot say that he does not object to the amendment—he simply does not like the words. He could table a drafting amendment in Committee. That would be no problem. We all know that, from time to time, even the Treasury and the Inland Revenue are less than precise in their language. We are prepared to give them the benefit of the doubt. If the Minister wants to play around with our amendment once he has accepted it, we will be more than happy to let him do that.
We have witnessed 20 months of grief and failure. Various commentators have estimated the amount of revenue lost—£40 million in one deal alone, the Granada bid for Forte. That was a hostile bid which was hotly contested. The advantage gained by the predator in that case must have been critical in determining the price of the bid: if it appeared that assistance would be available, the bid could be framed in such a way that the company was, in effect, being subsidised to the tune of £40 million.
That example and others cited by my hon. Friends add weight to the argument that action must be taken. The Government have responded in part, but they have not got it right. We expect the Minister to claim that the Government have changed, have responded and should be given the benefit of the doubt. If we give the Government the benefit of the doubt, many people will either make a lot of money or lose a lot of money. We want to ensure that the legislation is as tightly and precisely drawn as possible. It must exclude bona fide transactions and a clearance procedure should decide what transactions would be affected. The rules should be mandatory so that the Inland Revenue has no discretion not to apply them. It must be required to do so; we must not see a return to the laissez-faire approach that existed before 8 October 1996.
The legislation must be clear; it is not enough to produce a memorandum of understanding or some form of statement of practice as guidance. The information should be in the core of the legislation. An abuse is being corrected and the issues must be clearly defined. If there is a case for moving on this matter—we accept that there is—there is an even greater case for ensuring clarity and precision.
The Government have come to the issue late in the day. I am sure that the pushing and probing of my hon. Friend the Member for Dudley, West has played a large part in the Government's U-turn. The Government must tell us why they have decided to move. Is it because the legislation at their disposal is not appropriate and that sections 703 to 709 of the Income and Corporation Taxes Act 1988 are not relevant? If that is so, the Government should refute the claims of those individuals who have argued that the relevant powers exist. The Minister must not provide a bland assurance such as, "We have been


advised that the legislation would not be appropriate to act in these cases." We want more than that: we want a clear statement from the Minister and precise legislation.
We believe that our amendment would afford such clarity: it would give Inland Revenue clear and explicit instructions about how to do its job. That would be far more effective than any side notes or advice to accountants and lawyers. We want to see clear instructions. The measure must come into effect only for bona fide commercial reasons. People must be protected and legitimate business operations should be encouraged. The Government must not introduce a catch-all provision, which we would have to change and improve in subsequent Finance Bills.
The Government deserve a little credit: the massive ship has turned around. However, it has not yet reached its destination, and we shall help it on its way. The amendment offers the Minister much-needed assistance in dealing with the matter properly once and for all. That would be a major step forward in our treatment of this anomaly.

Mr. Tipping: I support amendment No. 10, tabled by the hon. Members for South-East Cornwall (Sir R. Hicks) and for North Cornwall (Mr. Tyler). I do not know quite how to describe them. Earlier in the debate, the hon. Member for North Cornwall described the hon. Member for South-East Cornwall and himself as Cornish pasty and custard pie, and he invited us to adjudge which was which. That is a bit like being asked to separate the sheep from the goats, but I think that their amendment is right and just.
The hon. Members mentioned a case in Cornwall, the hon. Member for Beaconsfield (Mr. Smith) mentioned a case in Nottinghamshire, and my hon. Friend the Member for Dudley, West (Mr. Pearson)—to whom the Committee owes much recognition and praise for his work in this area—referred to yet another firm. I know of many other examples across the country. It is a straightforward matter: those firms acted in good faith. They were aware of the press release issued on 8 October and they believed that they were acting properly. A further press statement issued on 5 December changed the situation completely and, although the companies had acted properly with the benefit of the appropriate advice, they now stand to lose significantly. I hope that the Financial Secretary will look favourably on the amendment, and I look forward to his reply to the debate.

The Committee has discussed a wider issue this evening: the significant loss of finance to the Exchequer over a considerable period. As the debate progressed, it became clear that the problem was identified 24 months ago; yet the Government have been slow to act. The Committee has disagreed on the extent of the loss to the Exchequer. For example, we are told that the Granada takeover of Forte involved a potential loss of £40 million. I think that it would be appropriate for the Minister to give us his best estimate of the loss. There is argument, first, about the length of time that it has taken Ministers to act and, secondly, about the cost to the Exchequer.
The Budget statement has featured prominently in the proceedings this afternoon, and I wish to contrast the Chancellor's words with the Government's actions. The Chancellor said:

As part of our continuing tight against tax and benefit fraud and tax loopholes, I am introducing a package of measures called 'spend to save'.
That is an important statement of the Government's intention to act. The Chancellor devoted considerable time to the subject in his Budget statement. I support his objective: it is vital to close tax loopholes such as this.
However, I shall contrast the determination and vigour of the Budget statement with the Government's tardiness in acting on the matter. I return the Financial Secretary to the Budget statement, when the Chancellor said:
The 'spend to save' package will cost £800 million over the next three years to secure, in a well-planned and measured way, revenue and expenditure savings of well over eight times that amount—£6.7 billion. These measures are additional to the effective steps that we have taken previously".—[Official Report, 26 November 1996; Vol. 286, c. 162–63.]
I contrast that vigorous statement and the commitment of significant resources—£800 million that will result in a payback of £6.7 billion in three years—with the Government's actions in the circumstances described in schedule 7. It is clear that the Government have been tardy and that a significant amount of money has been lost. Their actions contrast markedly with the Chancellor's promises in the Budget.
That leads me to my final point. Commentators are sceptical about the effect of the "spend to save" package: £800 million spent to bring in £6.7 billion in three years' time. Ministers may not be here in three years' time. It is quite clear that we will have a different Government then. It is important that the Financial Secretary assures the Committee this evening that the rhetoric in the Chancellor's Budget statement will be put into practice. Certainly the example that we have discussed tonight belies what was in it. Unless the "spend to save" package is achieved, my hon. Friends on the Treasury Bench in a future Labour Government will face a real financing difficulty. We will have an inheritance of neglect.
I commend my hon. Friend the Member for Dudley, West on his long battle to get action on this issue. I believe that he has been successful. I wish that we had seen the same passion from the Government on it.

Mr. Gary Waller: I shall make the briefest possible contribution about amendment No. 10, to which I have added my name.
I do not think that anybody would disagree with the objective of closing unsatisfactory tax loopholes. Nevertheless, I believe that it is a key precept of our system—indeed, of any truly democratic system—that legislation should not have a retroactive effect. Many people—rightly in my view—consider that schedule 7, as drafted, will be retroactive in effect, bearing in mind the wording of the original Inland Revenue press release. As a consequence, some family trusts will be adversely affected.
We have it in our power to put matters right. I very much hope that my hon. Friend will accept the amendment.

Mr. George Stevenson: I support amendment No. 9, which stands in the name of my hon. Friends. I shall reflect a little on the circumstances that have led us to consider this schedule and amendment. I shall also talk about the situation that we shall face if the schedule is not amended, and how that will be interpreted, given the evidence that we have, particularly that from the early 1990s onwards.
We all know that the Conservative party is desperate—perhaps more than desperate—to establish itself as the party of tax prudence and to have probity in all matters concerning tax. If we look at the circumstances that led to schedule 7, which the Government proposed, and try to relate it to the old saying, "You can lead a horse to water, but you can't force it to drink", we will have a good illustration of the Government's complacency—some would say irresponsibility—in this area.
Some of my hon. Friends have described the situation as a tax scam. I am not sure how individual hon. Members would describe a scam, but it is a scam when a law is being abused and those abusing it benefit. I think that that is the generally accepted definition of a scam. Could any hon. Member effectively deny that that has been happening since the early 1990s in this regard?
I am pleased to say that the horse to which I referred, and which we are hypothetically taking to drink, had a halter put around its neck when the companies involved—Reuters, Granada, some takeovers of privatised electricity companies, and perhaps many more—led even the Inland Revenue to accept that millions, not tens of thousands, of taxpayers' money was being creamed off as a result of the abuse of the regulations and the irresponsibility of the Treasury and Ministers in not applying the law properly, to the evident detriment of taxpayers.
My hon. Friends referred to the estimated £40 million that was lost to the taxpayer due to the Granada takeover. I leave hon. Members to contemplate what they could do with a very small fraction of that money, which they could spend on the dilapidated schools in their constituencies. That underlines how serious this is.
I realise that the Government can sit back complacently and think, "This is a technical matter. It is buried in the schedules and clauses of the massive Finance Bill. Who gives a damn? The general public aren't going to worry about this, only the high fliers in the City, and so on." However, as has been amply shown by my hon. Friends, it does matter, because the more money the Conservative Government complacently allow to be creamed off—money that should legitimately be paid into the public purse—the less there is available for vital projects in our constituencies.
In 1995, that mechanism was used in the Reuters and Granada takeovers and in the acquisition of several electricity companies. The same electricity companies as the Government undersold when they privatised them, which had benefited from massive public subsidy when they were privatised, used this mechanism to cream off more taxpayers' money and the Government sat on their hands and did nothing.
I have heard no one challenge the fact that the provisions of section 703 of the Taxes Act 1988, had they been implemented, could have stopped this scam dead in its tracks. We are legitimately entitled to ask why.

Mr. Pearson: I should like to point out two things to my hon. Friend, who talked about the giveaway to electricity companies. According to my figures, the water and electricity companies combined have probably benefited to the tune of £400 million as a result of the loophole not being closed before the 1995–96 financial year.
Someone in the Inland Revenue must have signed cheques, because this money had been paid out to people. That is how the system works.

Mr. Stevenson: I am grateful to my hon. Friend for putting several noughts on the figures that I quoted. I have no doubt that he is correct. I suspect that no hon. Member present in the Chamber could deny that this is the tip of a pretty large iceberg.

I used the metaphor of the horse being taken to water. The halter should have been put around its neck when this scam emerged. It was tightened by Stephen Edge, who, in The Tax Journal on 10 October 1996, said that the Government should do something about the scam. He said that they should use their powers and did not need to amend the law, and that it was costing the public purse.
This is the Government of tax probity and financial probity: they stand up in the Chamber day after day, week after week, telling us how they intend to close tax loopholes. In 1996, they were told by a reputable, well-recognised authority to do something about it. What happened? Nothing. So the halter was tightened around the horse's neck.
The next step was that my hon. Friend the Member for Dudley, West (Mr. Pearson) got hold of the halter and pulled it towards the water trough. The amendments that he tabled to the Finance Bill hit the nail on the head.

Mr. Jon Trickett: On the horse's shoe.

Mr. Stevenson: On the horse's shoe. In a most effective and devastating critique of the Government's complacency and irresponsibility, he urged them—[Interruption.] Some hon. Members may think that this is a laughing matter, but I do not. My hon. Friend the Member for Dudley, West urged the Government to take action, and tabled an amendment to that effect. What happened? They did not do "nothing" this time. They were shaken out of the complacent and irresponsible attitude that they had taken for well over 12 months. Heaven knows how much money had been lost to the Revenue by that time because of this scam. They said, in effect, "We will not accept it."
The halter that was put around the neck of the Government horse, the pull that it was given by the reputable authority and the further pull that was given by my hon. Friend the Member for Dudley, West have brought the Government to the trough. I commend them, because they are now at the trough and their heads are bent forward ready to drink. Unless they accept amendment No. 9, they will bend their heads to drink and, before they know where they are, the clever people in the City will have pulled the plug and there will be no water left in the trough.
What can possibly be wrong? How can the Government concoct or construct a case against an amendment that says:
Paragraphs 4, 5, 6 and 10 above shall not apply to any distribution unless the transaction in securities is carried out for bona fide commercial reasons and does not form part of a scheme or arrangement of which the main purpose, or one of the main purposes, is the obtaining of a tax advantage.
That is critical.

Mr. Jack: rose—

Mr. Stevenson: I realise that the Minister is getting jocular, impatient and nervous. He should be nervous: he should be ashamed of himself, not nervous. His predecessors allowed this situation to develop.
Had the evidence of this scam not been there for the Government to see in the past few years, perhaps they would be entitled to say, "We do not need this amendment. We think that we have got it right." I congratulate the Government on going as far as they have already. The evidence is overwhelming that the bona fide people involved have been penalised and the scam merchants have been allowed to get away with it. That is why our amendment is so essential.
The amendment is based not on a party-political knock-about, but on the facts as we know them. First, the Government's complacency has bordered on the irresponsible. Secondly, they have allowed this scam to continue, which has cost the taxpayer millions. That blows a hole in the Government's propaganda: they have tried to convince the public that they are prudent on tax and want to close loopholes. They are now trying to close a loophole, but they will fail unless the amendment is carried. Thirdly, they will leave a mess that, after the next election, a Labour Government will lose no time in clearing up.

Mr. Jack: This has been a wide-ranging and interesting debate. I should first like to deal with the amendment that has attracted the most attention and support. It was tabled by my hon. Friend the Member for South-East Cornwall (Sir R. Hicks) and supported by the hon. Member for North Cornwall (Mr. Tyler) and my hon. Friends the Members for Beaconsfield (Mr. Smith), for Ludlow (Mr. Gill), for Keighley (Mr. Waller) and for Rutland and Melton (Mr. Duncan). The hon. Members for North Warwickshire (Mr. O'Brien) and for Dudley, West (Mr. Pearson) also took up this point. I thank them all, especially my hon. Friend the Member for South-East Cornwall, for raising this issue. A number of family companies affected by the new legislation have already made representations to me on this point.
I looked again at the Inland Revenue press release that announced these proposals, to which hon. Members referred. Although it did not intend any element of retrospection, we accept that the original press release was ambiguous, which may have led trustees to take an overoptimistic view. We are prepared to err on the side of the taxpayer and accept the amendment.

Mr. Mike O'Brien: This problem is clearly due to the Government's incompetence. Will the Minister give us the cost involved during the period between the publication of the Bill and that press release? We want to know the cost of this new commitment as a result of the Government's incompetence.

Mr. Jack: I am sad that the hon. Gentleman calls it incompetence. As I said, it was a matter of interpretation. I said that we erred on the side of the taxpayer. If we have made an error, I am always the first to put my hand up and agree that we should put matters right. That is precisely what we have done. The hon. Gentleman

implored us so to do, and other hon. Members made their particular points. We have decided to act, but there are some lessons to be learnt for the future.

Mr. O'Brien: Will the Minister give way?

Mr. Jack: No, I shall not give way, because the hon. Gentleman had plenty of time to give his view.
In future, it would be sensible if taxpayers and their advisers remembered that Inland Revenue press releases are no substitute for the eventual legislation passed by the House. They simply inform the public that changes are being made. People who are considering entering into transactions can and should contact the Inland Revenue for further guidance, or wait until the legislation is finalised.
I should like to return to the substance of the remarks made by the hon. Member for North Warwickshire and his hon. Friends. It is important to focus on the heart of the matter, which is the use of the tax credit. Many hon. Members have said that money has been wasted, as if it has disappeared. The hon. Member for Stoke-on-Trent, South (Mr. Stevenson) even said that money had been creamed off. This money has gone, by and large, to exempt institutions—by that, we mean charities and pension institutions—ultimately for the benefit of recipients, especially of pensions.
My right hon. and learned Friend the Chancellor decided to act, because the cost and the use of the mechanism of paying special distributions by company share buy-backs was getting out of hand, and action had to be taken. I have been asked a number of times why we did not act more quickly. The answer—and, to be fair, the hon. Member for Dudley, West has probed us on this—is that, although we had seen what was happening, the situation had not reached the stage at which we felt that we must act.
In 1996, the use of this mechanism took on a much bigger proportion than was the case in 1995, as I think is shown by the figures published in the parliamentary answer. We therefore decided that it was right to end the activity in connection with security transactions. That is why we took the action that we took to stop the abuse that was eventually occurring. That said, the use of tax credits is important for exempt institutions, but we decided to halt the way in which they were being used by means of the mechanism of "streaming".
It has been asked why we did not use section 703 of the 1988 Act. The simple answer is that the existing legislation was not effective against most manipulation of that kind. If it had been, we would have used it, and we would not be debating the matter tonight. We have also been asked why we chose the mechanism that we chose. Classifying distributions in transactions associated with securities as the equivalent of FIDs was the most effective way in which to deal with the problem, and the terms under which that will apply are clearly stated in the schedule. The arrangements avoid the necessity to include a motive test, and the Bill sets out, precisely and unambiguously, how they will work.
The hon. Member for North Warwickshire asked a series of questions. I was grateful for his kindness when he said that he would allow me to write to him about specific points that he raised, and that is precisely what I shall do.
As for amendment No. 9, Opposition Members are clearly concerned that what they describe as bona fide activities are not effectively ruled out by our proposals. The legislation has been cast widely to ensure that all the transactions associated with securities that had exploited the streaming mechanism were caught, except those involving bona fide reasons—hence the exemptions for stock options, fixed-rate preference shares and ordinary pre-sale distributions. Those were carved out to ensure that bona fide transactions would not be prevented. In view of the exemptions, which have been carefully drafted to ensure that they do not put the Exchequer at risk, the amendment would produce a further set of hoops for taxpayers to jump through, and would introduce an additional and unnecessary element of bureaucracy.
Our drafting follows the spirit of amendment No. 9, but I think that the amendment is unnecessary. I hope that the Committee will accept amendment No. 10, and that the Opposition will not press amendment No. 9 at this stage.

Mr. Mike O'Brien: I am very sorry that the Financial Secretary has not seen fit to accept our amendment, which would clarify the position in a way that he has said is in the spirit of his intention. It is regrettable that the Government have not accepted an amendment that would have clarified a complex schedule. The schedule clearly needs clarification, and, in due course, we intend to press our amendment to a vote.
We have seen this Financial Secretary, and the other Treasury Ministers who are present, rise repeatedly to demand that the Labour party provides costings for this, that and everything. Here we have a Treasury Minister making a concession at the Dispatch Box as a result of the Government's incompetence in failing to set out their tax intentions properly on 8 October. He has no answer to the question, "How much will this concession cost?", but we know that the cost to the taxpayer of the Government's failure to act over the past year has been considerable. It may have been as much as £2 billion. It may have been a good deal less, but it has certainly been in the hundreds of millions.
That money has been used to finance corporate raiders and takeovers. It has been used in a way that is not in the public interest—in a way that has left hospitals short of resources, and schools facing cuts. It could have been used to build hospitals, to provide police officers on the beat and to prevent education cuts, but the Minister has failed to act.

Mr. Jack: I apologise for not dealing with the question of the cost of amendment No. 10. It would be less than £10 million.

Mr. O'Brien: Over the past year, however, the Government's failure to act has cost the taxpayer much more than that—and now, simply through his incompetence in releasing a press release from the Inland Revenue, the Financial Secretary has cost the taxpayer £10 million. As one of my hon. Friends has rightly said, he should apologise to the Committee. I am ashamed that the Government have taken such a course. They knew the problems, but failed to do anything about them in the

1995 Budget. They failed even to express displeasure at the abuse that was taking place in various takeovers. They did not use the anti-avoidance provisions in the 1988 Act. The Times said that there was a loophole big enough to be recognised from outer space, but the Minister did not even see it.
Today, we have seen the complacency of an incompetent Government and the failure of Treasury Ministers to protect the Revenue. The complexities of tax legislation all too often deter the public from taking an interest; that is a pity, because here we have a scandal that the Financial Secretary has not properly explained. How can the Government justify failing to act when the electricity industry was using £400 million of taxpayers' money, and Granada's bid for Forte was costing up to £50 million of their money—money that could have been used in the public interest? They have wasted taxpayers' money, and that is why we must press our amendment to a vote.

Amendment agreed to.

Amendment proposed: No. 9, in schedule 7, page 141, line 25, at end insert—
'13. Paragraphs 4, 5, 6, and 10 above shall not apply to any distribution unless the transaction in securities is carried out for bona fide commercial reasons and does not form part of a scheme or arrangement of which the main purpose, or one of the main purposes, is the obtaining of a tax advantage:.—[Mr. Mike O 'Brien.]

Question put, That the amendment be made:—

The Committee divided: Ayes 222, Noes 280.

Division No. 50]
[6.47 pm


AYES


Abbott, Ms Diane
Clarke, Eric (Midlothian)


Adams, Mrs Irene
Clelland, David


Ainger, Nick
Clwyd, Mrs Ann


Ainsworth, Robert (Cov'try NE)
Coffey, Ms Ann


Allen, Graham
Cohen, Harry


Anderson, Donald (Swansea E)
Cook, Frank (Stockton N)


Anderson, Ms Janet (Ros'dale)
Corbett, Robin


Armstrong, Ms Hilary
Corbyn, Jeremy


Ashdown, Paddy
Corston, Ms Jean


Ashton, Joseph
Cousins, Jim


Austin-Walker, John
Cox, Tom


Banks, Tony (Newham NW)
Cummings, John


Barnes, Harry
Cunningham, Jim (Cov'try SE)


Barron, Kevin
Cunningham, Ms R (Perth Kinross)


Bayley, Hugh
Dalyell, Tam


Beckett, Mrs Margaret
Darling, Alistair


Bell, Stuart
Davidson, Ian


Bennett, Andrew F
Davies, Bryan (Oldham C)


Bermingham, Gerald
Davies, Chris (Littleborough)


Berry, Roger
Davies, Denzil (Llanelli)


Blair, Tony
Davis, Terry (B'ham Hodge H)


Blunkett, David
Denham, John


Bray, Dr Jeremy
Dewar, Donald


Brown, Gordon (Dunfermline E)
Dixon, Don


Brown, Nicholas (Newcastle E)
Dowd, Jim


Burden, Richard
Eagle, Ms Angela


Byers, Stephen
Ennis, Jeff


Caborn, Richard
Etherington, Bill


Callaghan, Jim
Evans, John (St Helens N)


Campbell, Mrs Anne (C'bridge)
Ewing, Mrs Margaret


Campbell, Menzies (Fife NE)
Fatchett, Derek


Campbell, Ronnie (Blyth V)
Faulds, Andrew


Campbell-Savours, D N
Field, Frank (Birkenhead)


Canavan, Dennis
Fisher, Mark


Cann, Jamie
Flynn, Paul


Carlile, Alex (Montgomery)
Foster, Derek


Clapham, Michael
Foster, Don (Bath)






Fyfe, Mrs Maria
Mudie, George


Gapes, Mike
Mullin, Chris


George, Bruce
Murphy, Paul


Gerrard, Neil
Nicholson, Miss Emma (W Devon)


Gilbert, Dr John
O'Brien, Mike (N Warks)


Godman, Dr Norman A
O'Hara, Edward


Golding, Mrs Llin
Olner, Bill


Gordon, Ms Mildred
O'Neill, Martin


Graham, Thomas
Pearson, Ian


Grant, Bernie (Tottenham)
Pike, Peter L


Grocott, Bruce
Pope, Greg


Gunnell, John
Powell, Sir Raymond (Ogmore)


Hain, Peter
Prentice, Mrs B (Lewisham E)


Hall, Mike
Prentice, Gordon (Pendle)


Hardy, Peter
Prescott, John


Henderson, Doug
Primarolo, Ms Dawn


Hill, Keith (Streatham)
Purchase, Ken


Hinchliffe, David
Quin, Ms Joyce


Hodge, Ms Margaret
Randall, Stuart


Hoey, Kate
Raynsford, Nick


Hogg, Norman (Cumbernauld)
Reid, Dr John


Hood, Jimmy
Rendel, David


Hoon, Geoffrey
Robertson, George (Hamilton)


Howarth, George (Knowsley N)



Howells, Dr Kim
Robinson, Geoffrey (Cov'try NW)



Roche, Mrs Barbara


Hoyle, Doug
Rogers, Allan


Hughes, Kevin (Doncaster N)
Rooker, Jeff


Hughes, Robert (Ab'd'n N)



Hughes, Roy (Newport E)
Rooney, Terry


Hutton John
Ross, Ernie (Dundee W)


Illsley, Eric
Ruddock, Ms Joan


Ingram, Adam
Salmond, Alex


Jackson, Ms Glenda (Hampst'd)
Sedgemore, Brian


Jackson, Mrs Helen (Hillsborough)
Sheerman, Barry


Jamieson, David
Sheldon, Robert


Janner, Greville
Shore, Peter


Jenkins, Brian D (SE Staffs)
Skinner, Dennis


Jones, Barry (Alyn & D'side)
Smith, Andrew (Oxford E)


Jones, Dr L (B'ham Selly Oak)
Smith, Chris (Islington S)


Jones, Nigel (Cheltenham)
Smith, Llew (Blaenau Gwent)


Jowell, Ms Tessa
Soley, Clive


Kaufman, Gerald
Spellar, John


Keen, Alan
Squire, Ms R (Dunfermline W)


Khabra, Piara S
Steinberg, Gerry


Kilfoyle, Peter
Stevenson, George


Kirkwood, Archy
Stott, Roger


Lestor, Miss Joan (Eccles)
Strang, Dr Gavin


Livingstone, Ken
Straw, Jack


Loyden, Eddie
Taylor, Mrs Ann (Dewsbury)


McAllion, John
Taylor, Matthew (Truro)


McAvoy, Thomas
Thompson, Jack (Wansbeck)


McCartney, Ian (Makerf'ld)
Timms, Stephen


Macdonald, Calum
Tipping, Paddy


McFall, John
Touhig, Don


McKelvey, William
Trickett, Jon


Mackinlay, Andrew
Turner, Dennis


McLeish, Henry
Tyler, Paul


MacShane, Denis
Vaz, Keith


McWilliam, John
Walker, Sir Harold


Maddock, Mrs Diana
Wardell, Gareth (Gower)


Mahon, Mrs Alice
Wareing, Robert N


Mandelson, Peter
Watson, Mike


Marshall, David (Shettleston)
Welsh, Andrew


Marshall, Jim (Leicester S)
Wicks, Malcolm


Martin, Michael J (Springburn)
Wigley, Dafydd


Martlew, Eric
Williams, Alan (Swansea W)


Maxton, John
Williams, Alan W (Carmarthen)


Meacher, Michael
Wilson, Brian


Meale, Alan
Winnick, David


Michael, Alun
Wise, Mrs Audrey


Milburn, Alan
Wray, Jimmy


Miller, Andrew
Wright, Dr Tony


Morgan, Rhodri



Morris, Ms Estelle (B'ham Yardley)
Tellers for the Ayes:


Morris, John (Aberavon)
Mr. Clive Betts and


Mowlam, Ms Marjorie
Mrs. Jane Kennedy.





NOES


Ainsworth, Peter (E Surrey)
Elletson, Harold


Aitken, Jonathan
Emery, Sir Peter


Alexander, Richard
Evans, David (Welwyn Hatf'ld)


Alison, Michael (Selby)
Evans, Jonathan (Brecon)


Allason, Rupert (Torbay)
Evans, Nigel (Ribble V)


Amess, David
Evans, Roger (Monmouth)


Arbuthnot, James
Evennett, David


Arnold, Jacques (Gravesham)
Faber, David


Ashby, David
Fenner, Dame Peggy


Atkinson, Peter (Hexham)
Field, Barry (Isle of Wight)


Baker, Kenneth (Mole V)
Fishburn, Dudley


Baldry, Tony
Forman, Nigel


Banks, Matthew (Southport)
Forsyth, Michael (Stirling)


Banks, Robert (Harrogate)
Forth, Eric


Bates, Michael
Fowler, Sir Norman


Batiste, Spencer
Fox, Dr Liam (Woodspring)


Bellingham, Henry
Fox, Sir Marcus (Shipley)


Bendall, Vivian
Freeman, Roger


Beresford, Sir Paul
French, Douglas


Biffen, John
Fry, Sir Peter


Body, Sir Richard
Gale, Roger


Bonsor, Sir Nicholas
Gallie, Phil


Booth, Hartley
Garnier, Edward


Boswell, Tim
Gill, Christopher


Bottomley, Peter (Eltham)
Gillan, Mrs Cheryl


Bowden, Sir Andrew
Goodlad, Alastair


Bowis, John
Gorman, Mrs Teresa


Boyson, Sir Rhodes
Gorst, Sir John


Brandreth, Gyles
Grant, Sir Anthony (SW Cambs)


Bright, Sir Graham
Greenway, Harry (Ealing N)


Brooke, Peter
Greenway, John (Ryedale)


Brown, Michael (Brigg Cl'thorpes)
Gummer, John


Browning, Mrs Angela
Hague, William


Bruce, Ian (S Dorset)
Hamilton, Neil (Tatton)


Budgen, Nicholas
Hampson, Dr Keith


Burns, Simon
Hanley, Jeremy


Burt, Alistair
Hannam, Sir John


Butler, Peter
Hargreaves, Andrew


Carlisle, John (Luton N)
Harris, David


Carlisle, Sir Kenneth (Linc'n)
Haselhurst, Sir Alan


Carrington, Matthew
Hawkins, Nick


Carttiss, Michael
Hawksley, Warren


Cash, William
Hayes, Jerry


Channon, Paul
Heald, Oliver


Chapman, Sir Sydney
Heath, Sir Edward


Churchill, Mr
Heathcoat-Amory, David


Clappison, James
Hendry, Charles


Clark, Dr Michael (Rochf'd)
Heseltine, Michael


Clarke, Kenneth (Rushcliffe)
Hicks, Sir Robert


Clifton-Brown, Geoffrey
Higgins, Sir Terence


Coe, Sebastian
Hogg, Douglas (Grantham)


Colvin, Michael
Horam, John


Congdon, David
Hordern, Sir Peter


Conway, Derek
Howard, Michael


Coombs, Anthony (Wyre F)
Howell, David (Guildf'd)


Cope, Sir John
Howell, Sir Ralph (N Norfolk)


Cormack, Sir Patrick
Hughes, Robert G (Harrow W)


Couchman, James
Hunt, David (Wirral W)


Currie, Mrs Edwina
Hunt, Sir John (Ravensb'ne)


Curry, David
Hunter, Andrew


Davies, Quentin (Stamf'd)
Hurd, Douglas


Davis, David (Boothferry)
Jack, Michael


Day, Stephen
Jackson, Robert (Wantage)


Deva, Nirj Joseph
Jenkin, Bernard (Colchester N)


Devlin, Tim
Johnson Smith, Sir Geoffrey


Dicks, Terry
Jones, Gwilym (Cardiff N)


Dorrell, Stephen
Jopling, Michael


Douglas-Hamilton, Lord James
Kellett-Bowman, Dame Elaine


Dover, Den
Key, Robert


Duncan, Alan
King, Tom


Duncan Smith, Iain
Kirkhope, Timothy


Dunn, Bob
Knapman, Roger


Durant, Sir Anthony
Knight, Mrs Angela (Erewash)


Dykes, Hugh
Knight, Greg (Derby N)


Eggar, Tim
Knight, Dame Jill (Edgbaston)






Knox, Sir David
Sackville, Tom


Kynoch, George
Sainsbury, Sir Timothy


Lamont, Norman
Scott, Sir Nicholas


Lang, Ian
Shaw, Sir Giles (Pudsey)


Legg, Barry
Shephard, Mrs Gillian


Leigh, Edward
Shepherd, Sir Colin (Heref'd)


Lennox-Boyd, Sir Mark
Shepherd, Richard (Aldridge)


Lester, Sir Jim (Broxtowe)
Shersby, Sir Michael


Lidington, David
Sims, Sir Roger


Lilley, Peter
Smith, Sir Dudley (Warwick)


Lloyd, Sir Peter (Fareham)
Smith, Tim (Beaconsf'ld)


Lord, Michael
Soames, Nicholas


Luff, Peter
Speed, Sir Keith


MacKay, Andrew
Spencer, Sir Derek


Maclean, David
Spicer, Sir Jim (W Dorset)


McLoughlin, Patrick
Spink, Dr Robert


McNair-Wilson, Sir Patrick
Spring, Richard


Madel, Sir David
Sproat, Iain


Maitland, Lady Olga
Squire, Robin (Hornchurch)


Major, John
Stanley, Sir John


Malone, Gerald
Steen, Anthony


Mans, Keith
Stephen, Michael


Marland, Paul
Stern, Michael


Marlow, Tony
Stewart, Allan


Marshall, John (Hendon S)
Streeter, Gary


Marshall, Sir Michael (Arundel)
Sumberg, David


Martin, David (Portsmouth S)
Sweeney, Walter


Mawhinney, Dr Brian
Sykes, John


Merchant, Piers
Tapsell, Sir Peter


Mitchell, Andrew (Gedling)
Taylor, Ian (Esher)


Mitchell, Sir David (NW Hants)
Taylor, John M (Solihull)


Moate, Sir Roger
Temple-Morris, Peter


Monro, Sir Hector
Thomason, Roy


Montgomery, Sir Fergus
Thompson, Sir Donald (Calder V)


Needham, Richard
Thompson, Patrick (Norwich N)


Nelson, Anthony
Thornton, Sir Malcolm


Neubert, Sir Michael
Townsend, Sir Cyril (Bexl'y'hth)


Newton, Tony
Tracey, Richard


Nicholls, Patrick
Tredinnick, David


Nicholson, David (Taunton)
Trend, Michael


Norris, Steve
Twinn, Dr Ian


Onslow, Sir Cranley
Vaughan, Sir Gerard


Oppenheim, Phillip
Viggers, Peter


Ottaway, Richard
Waldegrave, William


Page, Richard
Walden, George


Paice, James
Walker, Bill (N Tayside)


Patnick, Sir Irvine
Waller, Gary


Patten, John
Ward, John


Pawsey, James
Wardle, Charles (Bexhill)


Peacock, Mrs Elizabeth
Waterson, Nigel


Pickles, Eric
Watts, John


Porter, David
Wheeler, Sir John


Portillo, Michael
Whitney, Sir Raymond


Powell, William (Corby)
Whittingdale, John


Rathbone, Tim
Widdecombe, Miss Ann


Redwood, John
Wilkinson, John


Renton, Tim
Willetts, David


Richards, Rod
Winterton, Mrs Ann (Congleton)


Riddick, Graham
Winterton, Nicholas (Macclesf'ld)


Rifkind, Malcolm
Wolfson, Mark


Roberts, Sir Wyn
Wood, Timothy


Robertson, Raymond S (Ab'd'n S)
Yeo, Tim


Robinson, Mark (Somerton)
Young, Sir George


Roe, Mrs Marion



Rowe, Andrew
Tellers for the Noes:


Rumbold, Dame Angela
Mr. Bowen Wells and


Ryder, Richard
Mrs. Jacqui Lait.

Question accordingly negatived.

Schedule 7, as amended, agreed to.

Bill (Clauses 40,62,68 82 and 92 and Schedules 7 and 13), reported, with amendments; to lie upon the Table.

Local Government and Rating Bill

Not amended (in the Standing Committee), considered.

Ordered,

That the Local Government and Rating Bill be considered in the following order, namely, New Clauses, amendments relating to Clause 1, Schedule 1, Clause 5, Schedule 2, Clauses 2 and 3, Clause 6, Clause 4, Clauses 7 to 33, Schedules 3 and 4, Clauses 34 and 35, New Schedules.—[Mr. Curry.]

New clause 1

PARISH COUNCILS: ADDITIONAL POWERS

'(1) A Parish Council may provide on an agency basis within the Council's area any service within the area by any public body or statutory undertaker.

(2) A Parish Council may make grants towards the enhancement or preservation of any service by any public body or statutory undertaker, including any local authority health authority, public utility, public transport operator, quasi-autonomous non-governmental organisation, housing association or any agency or voluntary body acting on behalf of or as contractor to any such body in exercise of their functions.'.—[Mr. Bendel.]

Brought up, and read the First time.

Mr. David Rendel: I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker (Sir Geoffrey Lofthouse): With this, it will be convenient to discuss also the following: New clause 3—Audit—
'( ) Before a parish council or community council may exercise a power given to it under this Part it shall subject its accounts to audit in accordance with Part III of the Local Government Finance Act 1982.'.
New clause 4—Local partnerships—
'(1) Where a parish council or community council exercises a power under sections 26 to 30, it shall have regard to any transport plans published by a local authority in its area which co-ordinates local partnerships, including any interested body.
(2) Where a parish council or community council exercises a power under section 30, it shall have regard to any community safety or crime prevention plans published by a local authority in its area which co-ordinates local partnerships, including any interested body.'.

Mr. Rendel: I am grateful for the opportunity to move new clause 1. As Liberal Democrats have said all along, the Bill is generally to be welcomed, because to some extent it enhances local powers. However, we have tabled the new clause because the Bill misses a good opportunity—it misses more than one good opportunity—to do much more to enhance local powers and to devolve central powers down to local councils.
When speaking in Committee about part III of the Bill, which deals with new powers for parish councils, the Minister said
It is a deliberately limited measure".—[Official Report, Standing Committee B, 3 December 1996; c. 147.]
I do not know whether it was deliberate, but it is certainly limited. The purpose of new clause 1 is greatly to enhance the new powers provided in the Bill to parishes.
Some parishes are very small and may not wish, or may not be able, to take on many new powers. Other parishes, however, are now remarkably large, and some are even as


large as the smallest district councils and unitary authorities. It is ludicrous that powers should not be given to such large parish councils after the Government have decreed that the similar powers should be given to district and unitary councils of a similar size.
It would be wrong to impose on all parishes all the powers that might be granted to the larger parishes, but there is no reason why the Bill should not at least enable parishes to take on greater powers if they feel that they are able to do so and are sufficiently large. That consideration is why new clause 1 would provide parishes with the opportunity to take such powers. Larger parishes may wish to take up those powers, even if the smaller ones do not.
The first part of the new clause would provide parishes with an opportunity to act as agent for other bodies. An important point, however, is that they would also be able to purchase improved services or even, in some cases, to preserve services that might otherwise be stopped because of financial cuts imposed on higher-level authorities.
Subsidiarity is the principle behind the new clause. Liberal Democrats believe that we should not only talk about devolving powers to lower level authorities but implement devolution whenever possible. I congratulate the Government on, to some extent, implementing that objective in the Bill. The principle of subsidiarity, however, should not be half-hearted, or available in some areas and to some authorities but not more generally. If it is true that we should pass down powers from Europe to national Governments, it is equally true that we should pass down powers from national to local authorities and from larger local authorities to smaller ones.
If the Government are genuinely to fulfil their pledge that they believe in subsidiarity, and if the Labour party is to fulfil its similar pledge, I hope that they will accept new clause 1.

Mr. Dafydd Wigley: I apologise for missing the first minute of the speech of the hon. Member for Newbury (Mr. Rendel). I assume that he believes, in moving new clause 1, which deals with parish councils, that its provisions should apply equally to community councils in Wales. An argument can certainly be made for certain powers to be given to larger community councils in Wales.
When one thinks of towns such as my home town of Caernarfon and of Colwyn Bay—which have the status of a community council, with very few powers—the need for change to current legislation is apparent. Towns such as Colwyn Bay may exist in a local authority in which the hinterland and the town itself have very different natures. They therefore require the ability to fine-tune policies to respond to the wishes of an urban area, such as Colwyn Bay or Llandudno, for example, as distinct from the wishes of the entire district or county authority in which they are located. I am not certain whether the wording of new clause 1 is appropriate to achieve that aim, although I am sure that the Minister will tell us.
In coming years, there will be a growing tide of pressure from identifiable communities, such as those I have mentioned, to be provided with greater autonomy and to be able to take the decisions that they can take for themselves—which is, after all, the basis of the concept of subsidiarity.

Mr. Nicholas Winterton: In principle I support the comments of the hon. Member for Newbury

(Mr. Rendel) and new clause 1, and I do so as an honorary vice-president of the National Association of Local Councils—an office which I have held for more than 20 years. I agree with his comment that we should make all levels of local government meaningful. Like him, I also very much commend the Government on the modest initiative that they have shown in the Bill to recognise the role not only of parish councils and—as the hon. Member for Caernarfon (Mr. Wigley) said—community councils in Wales but of town councils, which, in urban areas, do very much the job of parish councils in the rural areas of the United Kingdom. In principle, I warmly welcome what the hon. Member for Newbury said. I presume that the brevity of his remarks, on which I also commend him, means that the new clause is perhaps a marker, and not something on which he intends to divide the House.
If it is any consolation to the hon. Gentleman, I know that some Conservative Members support the idea behind the new clause, which is to pass greater powers down to parish, town and community councils, to enable them, with their unique knowledge of the areas they serve, to carry out jobs currently carried out either by borough or district councils, perhaps even by county councils, or even, occasionally, by the Government. That work is more appropriately undertaken by those—I hope that they will forgive me for using this phrase—who operate at the grass roots level of local politics.
If, in due course, the concept behind the new clause is taken up and additional powers are granted to parish, town and community councils, perhaps more people will seek to serve in local government—people who have local knowledge and commitment and want to serve those with whom they live. They could bring to that task a unique knowledge of their area. I thus warmly support the new clause.

Mrs. Helen Jackson: I shall be brief. I support new clause 1 in principle, but wish to relate it to new clause 3. If we are considering giving new powers to any public organisation, those organisations should be subject to proper scrutiny and public accountability. New clause 3 provides that, if a parish, town or other council is to be given new powers, its accounts should be carefully audited by the district auditor before those powers are granted in order to ensure that it is absolutely appropriate to proceed.
New clause 3 is important because there is a significant difference between a parish council and a local community association. Both can be used for consultative purposes—the consultation role is extremely important—but the power of parish councils derives from their power to levy a precept and manage a budget. That is what makes parish councils different and what makes it important that their public accountability should be stressed in the Bill.
My constituency contains the only parish councils in the city of Sheffield; the rest of Sheffield regards them in a rather bemused way and is unsure about what they are and do. There are three such councils, and each one is very different. One is in a very rural area of scattered communities but does an enormous amount—it manages and maintains the whole public footpath network in part of the Peak park and manages other parks, which it does extremely well. Its budget, however, is only slightly more than £100,000.
The second council serves a larger population but covers an area that is not so rural. It does less but has a much higher local profile and spends more of its budget on its premises. The third is a small town council which is genuinely in a state of confusion about its powers, duties and budget. The district auditor is at the moment trying to clear up some of that confusion. That is one of the reasons why it is important that the Bill sets out more clearly what we intend such councils to do.

New clause 3 should be accepted because the public and parish councils must be sure and made aware of the fact that their finances are to be presented publicly and be open to scrutiny. "Sleaze" is a nasty word, but sleaze is sleaze is sleaze, whether it is found on the Government Benches or our Benches, on a city, county or parish council, or whether it involves Mr. X the builder whose wife is on the parish council—we all know how local communities work.
I believe that the Audit Commission should be properly consulted about the provisions that it wants included in the Bill if, as I think we should, we pass more power to local level. That would ensure that greater accountability followed that power.

Mr. Andrew Rowe: I have to tell my hon. Friend the Member for Macclesfield (Mr. Winterton) that I was part of the original working group that led to the formation of the National Association of Local Councils, and I am delighted to learn that it is in such excellent hands. I am also a vice-president of the Kent Association of Parish Councils.
I congratulate the Government warmly on their efforts to enhance the powers of parish councils, which I believe to be entirely appropriate. It is clear that the pool of people from which parish councillors can be drawn is growing every day as people take earlier retirement, or are even forced to do so. I have great sympathy for the new clause, but, even if it cannot be accepted, I hope and believe that Ministers will agree that parish councils are increasingly demonstrating their capacity to take on more roles. I hope that the move to give them more control over their local communities—communities of which parish council members have great knowledge, on which those members are able to spend much more time and to which they can offer greater personal commitment than is often possible for borough and county councillors—will continue.

Ms Hilary Armstrong: This is an interesting little debate. I am sure that the hon. Member for Newbury (Mr. Rendel) will not press the new clause, because it would in essence give parish councils a power of general competence, and therefore many more powers than other authorities would have.
Until we properly address the relationship between central and local government and the powers of other authorities, it would be perverse of the House to give parishes powers that other tiers of government cannot exercise. Were we to do that, new legislation would have to be introduced to ensure that parish councils were made accountable for those powers and that all the necessary checks and balances were in place.
I am a fellow vice-president of the National Association of Local Councils and president of the Durham Association of Parish and Town Councils. I greatly support the important role that such councils play in their localities, but I am not convinced at this stage that they want to become county and district councils too. However, I believe that they have an important role to play, together with those authorities, in exercising functions that are currently the responsibility of other tiers of government.
That is why our new clause 4 offers models of partnership on two activities that are identified in the Bill—transport, and crime prevention and community safety. Given the current framework of local government, new clause 4 is by far the best way in which to proceed. We should ensure that there is real partnership between parish councils, town councils and the other tiers of government that have responsibilities in the areas they serve.
My hon. Friend the Member for Sheffield, Hillsborough (Mrs. Jackson) referred to new clause 3. If the Government were minded to be sympathetic to new clause 1, new clause 3 would become even more important as an acknowledgement that the auditing of parish and town councils should be far more onerous than it is at present. I thank the Minister for his letter about auditing, which did not arrive until after we had tabled new clause 3; if we had delayed tabling the new clause, it would not have been discussed today. I appreciate that it does not take into account some of the measures that the Minister addressed in his letter.
Those of us who are concerned about probity in public office will be reassured by many of the measures outlined in the letter. I commend my hon. Friend the Member for Hillsborough on her persistence in pursuing the matter and on ensuring that we looked at it in detail in Committee. I felt that it was important to pursue it on the Floor of the House. I hope that the Minister can reassure us that the measures outlined in his letter of 21 January will be implemented swiftly, as the Bill is implemented, so that the new powers in the Bill do not come into effect until those measures come into effect.
New clause 4 deals with the powers relating to transport, and to crime prevention and community safety; it emphasises a partnership approach. The Bill addresses transport and crime prevention, but we believe that it is important to reflect the work going on in local government on the face of the Bill. Local government is committed to seeking to achieve more sustainable patterns of transport use and successful local crime prevention initiatives. Local authorities have extensive responsibilities in both areas, and, in many senses, they are in a prime position to tackle the real problems that local communities face.
We had some interesting and wide-ranging debates in Committee on the problems of transport in rural areas, which local authorities are in a prime position to tackle. By going along with the spirit of new clause 4, the Government would ensure that parish councils were involved with district councils, county councils or metropolitan authorities in ways that would mean that there was a close look at transport needs and what could be done to tackle them.
The Department of Transport is already working with local authority associations to develop further a package approach to transport investment, to ensure that


authorities in a local area work out what is needed and to ensure that they target the finance available to tackle those needs. Parish councils have an important role to play in that and we should ensure that they are fully part of any plan that is being made.
I reiterate that we believe that local authorities need to be able to secure improvements in the quality of bus services and the integration of bus services with other forms of transport. Our debate in Committee highlighted the problems of rural areas in that regard and how important it was to take account of them.
It is also important that local authorities retain the ability to influence rail services. That is not as important in rural areas as it once was or as it should be. None the less, it is important that, as part of a wider transport strategy, all the different aspects of public transport come within the partnership approach that we seek to develop through new clause 4.
We want to ensure that the Government establish a policy and a financial framework within which authorities are encouraged to implement innovative transport strategies embracing a package of measures designed to improve the quality of public transport. They should look at car use; I know that the Road Traffic (Reduction) Bill, which is before the House tomorrow, deals with that.
Yesterday, I was in Loughborough looking at what the council has done to enable that small market town to provide pedestrian access, accessibility from the edges of the town and access for the disabled. Those developments have come about because the various authorities in the area have worked together and, despite the financial constraints, have come up with a package that is working for the town. It is our job to provide the framework to encourage and give an incentive to local authorities to work together on such developments.
There are things that can be done and there are things that local authorities are already doing. We believe that the Bill offers an opportunity for the Government to emphasise that parish and town councils play an important part and need to be consulted effectively. More importantly, they should be seen as partners in transport proposals.
The same is true of crime prevention, which is important in rural areas as well as in urban areas. When I was in Loughborough yesterday, I realised the importance of the integrated way in which the authorities had tackled crime prevention and transport in the town centre.
The second part of new clause 4 addresses crime prevention by encouraging concerned people and organisations to work together, each of them playing a vital role. We know very well that, if crime prevention is left to the police and seen as the responsibility of one agency rather than all agencies, adequate solutions simply do not come forward.
I have visited areas where they have spent a year considering crime prevention and bringing together voluntary organisations, different tiers of local government, the police, crime prevention panels, and so on, so that they work in partnership to identify practical ways in which they can deter criminals and find new ways of reassuring local people about security and community safety. Getting local government to take responsibility for ensuring such co-ordination would change things radically.
The recent Audit Commission report on finding ways forward for young offenders, "Misspent Youth", marked a remarkable departure for the Audit Commission, bringing together some of the things that it does best. It made it clear that we can save an enormous amount of money and more effectively tackle the problem of young people committing offences if we take a much more co-ordinated approach and if local government plays a strategic role in ensuring such co-ordination. All our experience points to that approach. New clause 4 would ensure that parish and town councils were in the middle of a partnership approach to the development of a strategy for crime prevention and community safety. The Government ought to listen to such suggestions.
I have re-read what the Minister said the last time we debated crime prevention. He thinks that it is an issue for the police. I was not satisfied with his approach then and remain dissatisfied. The Audit Commission's report identifies other ways of going forward and the new clause would enable the Government to take them up. The new clause is not dictatorial or profess that we know best. It offers local solutions to local problems. It would begin to tackle problems in a way that I know can work. We ought to be pushing to ensure that such an approach works.

The Minister for Local Government, Housing and Urban Regeneration (Mr. David Curry): If I were to recommend to the House that we vote for new clause 1, there would be a corporate heart attack among parish councillors. They constantly tell us that they want to be consulted and listened to more effectively. There is not an enormous demand for vast new powers. Parish councils range enormously in size, as I am sure the hon. Member for Newbury (Mr. Rendel) would acknowledge. In my constituency, the populations they cover range from 15,000 to covering 150 people. We must be prudent, so that we give them realistic and sensible powers that are relevant to local circumstances.
As the hon. Member for North-West Durham (Ms Armstrong) said, new clause 1—which, to put the record straight, would not cover community councils in Wales—would give more competence to parish councils than district or county councils. Many people think that there are enough tiers of local government. We need to ensure that they work together effectively. I am afraid that I cannot commend the new clause to the House.
I agree with the points made by the hon. Member for Sheffield, Hillsborough (Mrs. Jackson) about accountancy. As she will know from the letter of my hon. Friend the Under-Secretary, the Member for Hertsmere (Mr. Clappison), we have recently revised accountancy rules. They come into effect on 1 April—before most parts of the Bill come into effect. The rules were revised after consultation with the parish councils, and we should give them a chance to work. We are looking for accountancy with as light a hand as is necessary to provide probity. I know that she will agree with me on that.
I have sympathy with the spirit of new clause 4, and I would like to consider the inclusion of advice on any consultation to which the hon. Member for North-West Durham referred and in any guidance that we give to councils on their use of the new powers. I of course know that, as she says, the Department of Transport is considering what form of advice would be sensible, and is


discussing with local authorities what form of advice they would find useful. That is sensible co-operation. The problem of putting that in the Bill is that it would impose a mandatory burden on a council that sought to exercise its powers and involve a new, rather more complicated level of procedure. The new clause is somewhat unclear and vaguely expressed, although I realise that it is rather difficult to put such responsibilities in precise terms. I hope that she finds it sensible to consider practical guidance.
I have reached the same sort of conclusion with regard to crime prevention. I agree with what the hon. Member for North-West Durham is trying to do—sensible people would. She is trying to put into statute what is common sense, but is doing so in statutorily unusable language. I hope that she will therefore agree that it is sensible that local authorities, which know what they are trying to do and have practical experience, deal with the issue pragmatically and sensibly. If they think that we should be able to give guidance, we would of course want to do so. That is the sensible way in which to proceed. I therefore hope that hon. Members do not feel that it is necessary to press the new clause to a Division.

Mr. Rendel: I am very grateful to those who have supported new clause 1. Many more have spoken in support of it than in opposition to it. Perhaps that is yet another example of Conservative and Opposition Back Benchers having rather more sense than the Government.
Two points that have been made could be considered to be in opposition to the new clause. The first is that, if such powers were given to parish councils, district councils should have them also. I entirely agree with that, but do not think that that is a reason why we should not give the powers to parish councils in the first instance. Let us give such powers to parish councils and then go on to give a power of general competence to districts and boroughs as well.
The second point was that the powers might give many parish councillors heart attacks. I do not see how offering parish councillors powers that they may or may not take up, depending on whether they feel that they are able to do so and that the council is a relevant size for the powers to be used effectively, could give any parish councillor a heart attack. I therefore reject that criticism.
I suspect that the new clause would not succeed if I pressed it to a Division. I therefore beg to ask leave to withdraw the motion.
Motion and clause, by leave, withdrawn.

New clause 2

EXEMPTING SHOWHOUSES FROM NON-DOMESTIC RATING

'(1) Part III of the 1988 Act is amended as set out in subsection (2) (which provides for the abolition of liability to non domestic rating in respect of housebuilders showhouses).
(2) In section 66 there shall be inserted:
(5A) (a) Where property

(i) has been constructed or adapted for use as living accommodation;
(ii) has not since it was constructed or adapted for use as living accommodation been used for that purpose; and
(iii) it is used wholly or mainly as a showhouse;

it shall be treated as next in use as domestic property for the purposes of subsection (5) above.

(b) for the purposes of subsection (5A)(a) above property whether furnished or not is used as a showhouse if

(i) it is used by or on behalf of its owner for display to members of the public as an example of other property constructed or to be constructed by him in order to market that other property, and
(ii) that other property is, or will be when constructed, domestic property by virtue of subsection (5) above".'.—[Mrs. Peacock.]

Brought up, and read the First time.

Mrs. Elizabeth Peacock: I beg to move, That the clause be read a Second time.
My right hon. Friend the Minister will be aware of my long interest in the provision of housing for purchase and for rent. This is an occasion on which the Government can help reduce the cost of new houses.
My right hon. Friend the Minister will recall that, in a rating tribunal case in 1995—Ideal Homes v. Ian Walker—it was decided that house-builders' show houses were properly subject to uniform business rate, not council tax. That decision followed a long period of uncertainty after the introduction of the UBR, during which some authorities claimed UBR on show houses and others were satisfied to collect council tax. Given that the uncertainty was resolved by the decision, it is understandable that most local authorities started to charge UBR, and that, based on research undertaken by the House-Builders Federation, the charge paid by house-builders paying council tax would be roughly doubled. The federation has always argued that show houses should be subject not to UBR but to council tax, and new clause 2 sets out to achieve that.
I am sure that my right hon. Friend the Minister will be asking himself—and possibly me—about the cost of the proposal. Perhaps I might tell him. The cost of making show houses subject to council tax rather than UBR is—I estimate—about £5 million per annum, based on current levels of house-building activity. That is a small sum in United Kingdom accounting terms, but it is real money that has to be paid by housebuilders at a time of relatively poor trading activity, although recently we are seeing many more house starts and much more activity.
The change in law requested would have no cost to the Government: it would merely switch funds between local authority budgets. Levying UBR on what is housebuilders' stock is an unusually onerous approach and one that breaches the general principle of not taxing stock. The showhouse is an empty, unsold house and should be subject to the appropriate council tax regime, which is intended to provide an incentive to avoid keeping property empty unnecessarily. A showhouse serves the same purpose as a new car in a car showroom—it is there to increase the rate of sale of other stock. A car in a showroom is not taxed until it is sold. That principle is already breached by the levying of council tax at the basic rate.
I appreciate that my right hon. Friend the Minister of State may choose to remind the House that showhouses are sometimes used as sales offices and we must bear that in mind. It is, however, penalising the legitimate use of housing stock to subject it to UBR, which was essentially intended for commercial, retail or industrial property. Moreover, it appears from the original record of debates


in Hansard that it was never the intention of Parliament to tax domestic buildings with the commercial rating legislation. A showhouse, like a car in a showroom, is temporarily and briefly used for demonstration purposes before reverting to the residential use for which it was designed and built. It should therefore be taxed only in the manner appropriate to its intended residential use—through the council tax.
The impact of UBR is uneven. Some 50 per cent. of authorities charge UBR and the other 50 per cent. charge council tax. That is clearly unfair, but the removal of the anomaly can be achieved only by increasing costs in a sector in which I imagine the Government wish to see non-inflationary recovery. Any further cost burden will only retard recovery, while its removal would be a small but welcome step forward.
The majority of housebuilders are not large, publicly quoted companies, as we are sometimes told. They fall within the small and medium-sized enterprise sector, which the Government and all of us wish to encourage. Removal of the anomaly and reduction in cost would therefore clarify the tax treatment of an important group of SMEs and, I hope, be reflected in house prices, which would benefit all our constituents.

Mr. Nicholas Winterton: I declare my interest as chairman of the Manufacturing and Construction Industries Alliance. I congratulate my hon. Friend the Member for Batley and Spen (Mrs. Peacock) on new clause 2 and register strong support for what it seeks to achieve. My hon. Friend advised the House that the cost to the housebuilding industry of making showhouses subject to uniform business rate rather than council tax is estimated to be some £5 million. I am sure the House will agree that that is not a huge sum in the context of the size of that important sector of our economy, but I emphasise that the small to medium-sized building firms and companies are hit disproportionately by the tax, at a time when—as my hon. Friend said—profit margins have been squeezed by the recent severe recession in the housing market for which the industry itself was not to blame in any way.
Newly built showhouses awaiting sale are simply the stock—I emphasise the word "stock"—of the housebuilding industry or, at worst, are unoccupied residential premises. Their prime purpose and their prime use is simply display so that potential purchasers of a new home can see the product that they are considering buying. It is inevitable that in some showhouses there may be a receptionist to greet visitors or perhaps even a salesman or saleswoman available, on a part-time basis or by appointment, to negotiate a sale, but that is not necessarily typical of many of the showhouses on the many small developments where the local building company or firm has neither the resources nor the inclination to maintain the cost of a sales team. We need therefore to assess the tax liability of such premises not on the basis of what minor activities may on occasion be undertaken in showhouses but on the basis of their prime purpose which is, as I have already said, as the stock of the building industry.
Some people have expressed the irrational fear that the new clause's amendment to the local government tax regime would set a precedent for other industries seeking to widen the benefit. I do not accept those arguments.
Dentists or pharmacists who use one or two rooms in their home for their practice are using those premises not as stock for sale but as a place of business under the prime purpose criteria. Retailers who live above the shop could not claim the shop as part of their residence because its prime purpose is the conduct of retail trade.
Simply because a housebuilder might on occasion undertake limited secretarial or administrative work in a showhouse—as Members of Parliament sometimes do in their homes—should not mean that suddenly the prime purpose of the premises is considered to be the commercial conduct of secretarial and administrative work. The prime purpose of the property is its sale. If that were not the case, in the interests of justice all right hon. and hon. Members who cannot escape paperwork, correspondence, filing, meetings and even media interviews at home would have to be charged the uniform business rate as well as the council tax.
I sincerely commend the new clause to my right hon. Friend the Minister of State and I hope that he will listen carefully and sympathetically to what has been said tonight and accept that the unjust anomaly should be addressed. I hope that he will undertake to make acceptable proposals of his own for putting the matter right. We have spoken briefly but to the point and I hope that the Government will make proposals to put right the current unjust anomaly.

Mr. Curry: As my hon. Friends will know, we can add to the list of eligible properties and businesses under the order-making powers that are attached to the Bill. We would look to use that mechanism in any additions we made to the Bill and on those grounds I will ask my hon. Friends to withdraw the new clause.
I wish to state clearly, so that there is no misunderstanding, that I am in two minds on the issue. There is a good case on both sides of the argument. As my hon. Friend the Member for Batley and Spen (Mrs. Peacock) said, the land tribunals have defined the problem recently so the legal uncertainty is now at an end. She also admitted that the way some builders use the showhouses has a business element. When showhouses lie empty for a while, we must also take into account the tax treatment of empty properties under the council tax regime.
Equally, I can see that placing show houses on the business rate list—even for a short time—and moving them on to the council tax list once they are sold as dwellings would place an administrative burden on the council tax payer and the Valuation Office. Therefore, on the grounds of deregulation, there is a case to be listened to. I can tell my hon. Friends the Members for Batley and Spen and for Macclesfield that I am ready to listen to that case and I am willing to receive representations to balance the arguments. If they can persuade me that this is the correct move, I will use the order-making powers in the Bill to bring it into effect and I shall do so conterminously with the discussions on the legislation.

Mrs. Peacock: My right hon. Friend the Minister of State has obviously listened to what I and my hon. Friend the Member for Macclesfield have had to say, and I hope that he will be able to introduce a measure along the lines that we have suggested. I therefore beg to ask leave to withdraw the motion.
Motion and clause, by leave, withdrawn.

New clause 5

EXEMPTION FOR SPORT AND RECREATION CLUBS

'In Schedule 5 to the 1988 Act there is inserted—
"Sport and Recreation Clubs
15A. A hereditament is exempt to the extent that it consists of property used wholly or mainly by a club, society or other organisation not established or conducted for profit for purposes of sport or recreation.".'.—[Mr. Macdonald.]

Brought up, and read the First time.

Mr. Calum Macdonald: I beg to move, That the clause be read a Second time.
The intention of the new clause is to remove the liability for non-domestic rates from voluntary sports and recreation clubs and associations. The effect of this would be to bring the treatment of clubs in England and Wales into line with the treatment of clubs in Scotland. I hope that the Government will recognise that this is an important issue, and that it is a fair and reasonable proposition to which they should respond positively.
The Government should make a positive response for two reasons; the first being the importance of sport to our national life. The Government have explicitly acknowledged that, and the Prime Minister made his contribution last year in a document called "Raising the Game". The document was all about the need to improve the access of British people—particularly young people—to sporting facilities. We all acknowledge that an important part of that is the role of voluntary clubs and associations, and particularly the role of the thousands of volunteers who devote much of their time trying to involve young people in sport and recreational activities.
The second reason why the Government should accept the fairness and common sense of the new clause is that clause 2 of the Bill aims to correct the anomaly that currently exists between the treatment of sporting rights in England and Wales and the treatment of sporting rights in Scotland. However, I wish to point out to the Minister that a second anomaly—between the treatment of sporting clubs in England and Wales and the treatment of such clubs in Scotland—still exists. That anomaly is no different in principle from that which the Government are trying to tackle in clause 2 affecting sporting rights. If it is right to do away with one of those anomalies, I suggest that—by the same logic—the Government should do away with the other. That is what I am trying to do in new clause 5.
One of the reasons why the Government could not include the measure at the outset was that they were apparently unaware of the existence of the anomaly. Certainly the Minister seemed to be unaware of the matter when I raised it in Committee, although he has since checked and found that it does exist. He wrote to me on the matter and sent copies of the letter to all other members of the Committee. I hope that he is now prepared to take a fresh look.
The question of costs must be addressed, and the Central Council of Physical Recreation—the umbrella body that covers all voluntary clubs and associations—has looked at this. Its most recent study of the effect of the new clause suggested that the cost to the Exchequer would be £14 million a year. That sum, I suggest—although it is not negligible—is relatively modest when

compared with the total take of taxation, whether local or national. More relevant, perhaps, is that it is a reasonable sum when compared with the cost of removing the anomaly affecting sporting rights.
The Government estimate that the cost of removing the sporting rights anomaly will be £4 million to £5 million. That anomaly affects only 6,000 holders of sporting rights in England and Wales. By comparison, the sporting clubs anomaly affects over 150,000 clubs and associations—25 times as many clubs—and will affect the 6.5 million people who enjoy and use these clubs. Given that the additional costs of removing the anomaly dealt with by the new clause are only £14 million—compared with the £5 million costs of clause 2—the Government will be getting good value for money.
I represent a Scottish constituency, and I am aware that I am speaking on an issue affecting England and Wales, but that is entirely within the rules of the House. I have tried to be brief, and I shall conclude by quoting briefly some of the clubs and associations that have been in touch with me to allow them to have their say directly—as it were—on the importance of the issue. The National Cricket Association has been in touch with me through the firm of chartered surveyors that acts as rating adviser to the association, and it pointed out that most of the individual members of the association are small voluntary cricket clubs
who survive purely on the income that can be generated from their individual members. Over the last few years … many of the clubs have fallen into severe financial difficulty".
This has occurred as a result of the generally difficult economic background of the past few years. Inevitably, the association said, a number of clubs will not survive.
At the same time, the association said that a
substantial increase in rate liability … has fallen on the clubs as a result of the rating revaluations in 1990 and 1995, and the generally unsympathetic attitude of Local Authorities to the applications which have been made for … rate relief".
The association's letter continued:
The first effect of this is usually that the club will halt any expenditure on maintenance or equipment. Club premises fall into disrepair, reducing the attraction of the club to new members. The falling standard of facilities such as nets and practice equipment also deters parents from encouraging their children to participate in the youth activities at clubs which in turn will have a knock-on effect in the next few years on the number of talented youngsters rising to the top level of our—
meaning the English—
national summer game.
Given the state of English cricket today, that seems to be a cry from the heart to which the House should respond. The association then stated:
A straightforward and very tangible benefit which could be provided for clubs would be mandatory rate relief … clubs would undoubtedly view this as a significant encouragement to their activities which would help strengthen the long term future of the game throughout the United Kingdom.
I should like to mention a letter that I received from the secretary of the English Indoor Bowling Association to illustrate the different types of sport that are affected by the rating liability. He pointed out that a lot of capital investment is needed to provide the basic facilities for indoor bowling. The association believes that it has a strong case for arguing that those facilities should benefit from rate relief. He made an important relevant point when he stated:


Indoor bowls is played by people of all ages, there is no advantage in gender, size, age, and within reason, physical fitness. It is played by many people with disabilities with the majority of clubs providing sessions each week for the blind and partially sighted, wheelchair bound bowlers and other mentally and physically handicapped people … the operation of the bowls hall is often left to the clubs themselves and in common with the majority of the members clubs, they are run mainly with voluntary labour since without this they would not be viable.

8 pm

It is useful to compare the services that such associations provide for young people, the handicapped and the old with those provided by the holders of shooting rights, who will enjoy a 100 per cent. exemption under clause 2. That comparison makes clear the case for extending the exemption to voluntary clubs and associations.
The Football Association has told me that many of its members are voluntary clubs, local clubs and associations. It has stated in a letter to me:
We understand that it is the intention of the Government to introduce measures which will assist financially those business `sporting rights' owners throughout the UK. In our view, it is equally important that our affiliated voluntary clubs that have to pay the Uniform Business Rate should be afforded equal status".
The FA goes on to point out that it
is committed to investing in establishing links between clubs and local schools.
It argued that if such clubs were granted relief from rates they could reinvest the finances in youth coaching programmes.
The letters and representations that I have received from different clubs and associations make my case. I hope that the Minister will offer a positive response. I cannot see any reason why the anomaly between England and Scotland in respect of sporting clubs should be allowed to continue if it is the Government's intention to remove the anomaly between England and Scotland in respect of the holders of sporting rights.

The Parliamentary Under-Secretary of State for the Environment (Mr. James Clappison): I agree with the hon. Member for Western Isles (Mr. Macdonald) that sports clubs play an important role in communities across England, Wales and Scotland. I, too, would like to play tribute to the individuals whose voluntary efforts help to sustain those clubs which play such an important part in the community, especially for young people. It is because of the potential value of sports clubs to the community that they are eligible for 100 per cent. rate relief at the discretion of the local authority.
I believe that it is right that discretion should continue to rest with the local authorities since they are in the best position to decide which club is of genuine benefit to the community. Local authorities will know the needs of the local community and will be able to judge the importance of particular sports clubs in the light of the range of services already on offer. Not all such clubs will be equally deserving. Even those that are not conducted for profit may have constitutions or membership rules that effectively exclude sections of the community. In all the circumstances it is appropriate that relief should be discretionary.
As the hon. Gentleman said, the funding of discretionary relief was discussed in Committee. Local authorities in Scotland can grant discretionary relief to non-profit-making sports clubs in the same way as they

can in England and Wales. In England and Wales, however, 25 per cent. of the cost must be met by the local authority, whereas in Scotland the Exchequer meets the full cost. I appreciate that, because of those arrangements, sports clubs in England and Wales may consider that they are at a disadvantage compared with their colleagues north of the border. That is certainly an anomaly and we are as keen as anyone to avoid such anomalies.
Changes to the funding arrangements are a matter for secondary legislation. I and my colleagues at the Welsh Office and Scottish Office propose therefore to undertake a review of how discretionary relief is funded in England, Wales and Scotland with a view to providing consistent treatment for all sports clubs. We will aim to complete that review by the time that the Bill receives Royal Assent. In the meantime, I invite the hon. Gentleman to accept my arguments about why discretionary relief should be awarded. I invite him to accept what I said about the review that we will carry out into the funding of that relief and to withdraw the new clause.

Mr. Nick Ainger: On the anomaly between England and Wales and Scotland, can the Minister assure the House that the review will not have any detrimental effect on Scotland?

Mr. Clappison: I would not like to pre-empt or prejudge how that review will be conducted. We have all accepted that there is a case for such a review and I hope that the hon. Gentleman will accept that our approach to it is constructive.
I should like to share the timely sentiments that the hon. Member for Western Isles expressed about English cricket, although we may diverge on other sports.

Mr. Macdonald: I am grateful to the Minister for his constructive reply.
I am happy to withdraw the new clause on the assumption that the result of the review will not mean that clubs in Scotland end up being liable for rates or that their local authorities will end up losing some of the support that they currently receive. The Minister would not be a popular person if he chose to go down that road. I look forward to seeing the results of the review. On that basis, I beg to ask leave to withdraw the motion.
Motion and clause, by leave, withdrawn.

Schedule 1

RELIEF FROM NON-DOMESTIC RATES FOR GENERAL STORES ETC. IN RURAL SETTLEMENTS: ENGLAND AND WALES

Ms Armstrong: I beg to move amendment No. 38, in page 20, leave out lines 21 to 23 and insert—
'(a) on the day concerned the hereditament is

(i) within a settlement identified in the billing authority's rural settlement list for the chargeable financial year, or
(ii) is designated by the billing authority as being used for purposes which are of benefit to the local community'.

Madam Deputy Speaker (Dame Janet Fookes): With this, it will be convenient to discuss the following amendments: No. 29, in page 20, line 29, leave out from beginning to end of line 5 on page 21 and insert
'any conditions prescribed by the Secretary of State by order are satisfied'.
No. 30, in page 21, line 37, leave out '(ii)'.
No. 31, in schedule 2, page 23, leave out lines 2 to 23 and insert
'any conditions prescribed by the Secretary of State by order are satisfied'.

Ms Armstrong: In many senses the amendment brings us back to the debate on the definition of a general store and a post office which kept us busy for some time in Committee. We simply want the Government to think about the matter.
As it stands, the Bill makes it clear that to be eligible for mandatory rate relief a hereditament must fulfil several key conditions. It must be situated in a rural settlement with 3,000 people or fewer; it must be used as a general store or post office; it must be the only general store or post office within the settlement; and it must have a rateable value below an amount prescribed by the Secretary of State by order.
In Committee, we discussed in detail what was a post office or a general store. The argument about that definition relates to where such a facility may be located. We were concerned particularly about urban areas where relative social exclusion and social deprivation have meant that the role of the urban post office or general store is now similar to that of the village post office or village general store. The Government went some way towards trying to meet those concerns in Committee, for which we were, and are, grateful. They made it clear that the Secretary of State intends to designate rural areas even when they may fall within the boundary of a metropolitan district and be on the edge of a much larger conurbation.
In Committee, several of my hon. Friends raised that issue and were grateful for the Government's response. However, there remains the problem of urban estates that may be at the edge of a conurbation, but be isolated because their residents do not move from the estate very much. In Committee the Minister said that that issue could be tackled through the use of the single regeneration budget.
I have been considering the matter and I do not believe that the SRB is designed to help struggling general post offices or general stores in an urban area. The SRB is important in terms of raising an area's economic status and improving it generally. There is no doubt that, if that happens, the ability of the general store or post office to survive will improve, but the size of the SRB fund means that there is no chance of every estate with such a problem being able to use it. In addition, the SRB programme is designed to tackle much more comprehensive situations than the sort of problem that the Bill seeks to resolve.
I understood what the Minister was trying to say, but he did not give an adequate answer. I shall not seek to press the amendment to a vote, but I ask the Minister to recognise that the responses that we have received so far are not sufficient. Problems exist on some bleak and desolate urban estates that are similar to those of a rural

village. It is the responsibility of the House not to forget that problem when we tackle similar problems in rural areas. It is in that spirit that I have moved the amendment.

Mr. Rendel: I am delighted to have the opportunity to speak to amendments Nos. 29, 30 and 31, which go to the heart of the decision on how discretionary or mandatory relief should be given to local businesses. I think that all hon. Members are aware of the needs of small businesses in rural areas and of the benefit that the Bill may bring to some of our smaller rural communities, but the way in which that benefit is to be given has to be questioned. The aim of my amendments is to enable all the rate relief to be given on a discretionary basis rather than the mandatory basis contained in the Bill.
One of the most interesting aspects of the Government's decision to make some of the relief mandatory is that, in other areas of their business, they have been keen to try to ensure that where Government money is handed out it is targeted on those who are most in need. That has happened in the past with discretionary rate relief and, more recently, with the Government's benefit legislation. It seems odd that in this instance the Government are moving away from targeting the rate relief on those who are most in need and moving towards a generalised policy of giving rate relief of at least 50 per cent. to certain types of business even if some of them do not need it.
Once again, we come back to the important principle of subsidiarity, which lies at the heart of my amendments. In Committee I said that it was odd that the Government should go for a half-and-half policy; my point was not properly answered. Half the rate relief for post offices and general stores is to be mandatory and the other half is to be discretionary.

In Committee, the Minister said that it was not a half-and-half policy; he said that businesses that were most important for rural villages would receive mandatory relief, but less important businesses would not, but that was not the half-and-half aspect to which I was referring. I was making the point that the Government cannot make up their mind about the best way to give rate relief, even to those businesses that they consider to be the most important in rural areas—small post offices and general stores. They cannot decide whether rate relief should be given on a mandatory or discretionary basis. I see no logic behind this half-and-half system, where some of the relief can be left up to the discretion of the local authority and some of it has to be decided here in Westminster.
The one criticism of the amendments that has been made, and which may, if not properly understood, concern some smaller local authorities that may benefit from rate relief, is that some of them simply would not have the money to give discretionary relief. It is clear that the Government will set aside the money in their future Budgets as soon as the rate relief system is introduced. That money can be distributed in a number of ways. If the mandatory part of the Bill were removed, it would be possible for the Government to decide, in next year's rate support settlement, that some of that money should be used directly to enhance rate support for those local authorities that are expected to pass on rate relief on a discretionary basis. If that is done, there is no reason to


assume that any local authority will be worse off as a result of using discretionary powers. The discretionary powers will be properly available to them, as will the money to use them. Therefore, the small businesses that need the rate relief will receive it.
I firmly believe that local people know best where to spend the money. I was happy to hear that that belief was strongly supported by two Conservative Members who spoke on new clause 1. If councils believe that the right way to use the money that they will have in future is to give discretionary relief to local businesses, they will do so. If they do not believe that, they should have the right to choose how best that money should be spent. Some authorities may have greater needs for the money than rate relief for small businesses. It is their choice; they are in the best position to know. Some local authorities may give much more discretionary relief than the Government currently envisage.
By making part of the rate relief mandatory, the Government are showing that they do not trust local government to support vital rural businesses in the way that all hon. Members would like them to be supported. It is a case of, "We know better than them." The Government are saying that they know better than local authorities where the rate relief is needed, but that is not true, and I was happy to have the support of two Conservative Members on that issue. The amendments provide a touchstone to show the commitment of parties in the House to the principle of subsidiarity, of devolving powers to the lowest level, and of trusting local authorities to take the right decisions for their people because they are in the best position to make the right decisions. Because the amendments go to the very heart of the principle of subsidiarity, I shall do everything I can to force a Division on them tonight.

Mr. Curry: I am grateful to the hon. Member for North-West Durham (Ms Armstrong) for the way in which she introduced her amendment, saying that she wanted to extend further the debate about isolated shops. She was effectively talking about estates that are rather remote from cities.
I hope we agree that, in practice, the relief scheme might be of little assistance in such cases. Generally speaking, in villages, there are unlikely to be a range of social problems affecting the environment in which a shop operates—basically, it is a question of numbers. In urban areas, there are far more likely to be adverse factors arising from the broader environment in which a shop operates. Such factors may include a deficiency in purchasing power, social problems, vandalism and crime—in short, the sort of problems that we have seen in city challenge areas.
Whereas in a village one can address the specific problem of a shop in terms of a deficiency in its financial buoyancy, in urban areas one has to look mainly at the general environment. In such areas, the sort of schemes I spoke about—the single regeneration budget schemes, of which there will shortly be 500 throughout the country—can be of assistance. If the hon. Lady would like to discuss how SRB schemes or other Government programmes can incorporate the sort of problems she raised, I should be happy to oblige her. Such programmes have to be developed, and each succeeding round brings its own lessons. When discussing such issues, I can wear my urban regeneration hat as well.
As for the points raised by the hon. Member for Newbury (Mr. Rendel), I recall that when I was in the Committee on what became the Housing Act 1996, the Liberal Democrat spokesman spoke at great length about how wicked was our intention to do things by order and through secondary legislation. He said that everything should be on the face of the Bill. The hon. Gentleman is now saying that it is terrible that everything appears on the face of the Bill, and that discretionary powers should be used. That would give my right hon. Friend the Secretary of State for the Environment gargantuan powers.
The hon. Gentleman overlooks the fact that, under the amendment, the Secretary of State would have to prescribe the conditions that have to be fulfilled before the relief was exercised. I know that my right hon. Friend will be deeply touched by the hon. Gentleman's confidence in him, but, for once, my right hon. Friend believes that this responsibility and power should be expressed clearly and defined by Parliament. The purpose of the Bill is simple, easy to administer, easy to deliver and easy to understand. Local authorities have made it clear that there will be no problem applying it.
The village shop and post office in the circumstances that we have described represent a clear and definable case for assistance. We should extend mandatory assistance to them so that they can be sure they will receive that assistance. The measure is an indication of our willingness to address the real concerns affecting those areas. I am, therefore, not willing to transfer that assistance into a discretionary relief. We have tried to be precise in our intentions, and our action has been welcomed. If we were to accept amendment No. 29, we would remove certainty, clarity and simplicity from the Bill, so I cannot commend it to the House.

Amendment negatived.

Amendment proposed: No. 29, in page 20, line 29, leave out from beginning to end of line 5 on page 21 and insert
'any conditions prescribed by the Secretary of State by order are satisfied'.—[Mr. Rendelj

Question put, That the amendment be made:—

The House divided: Ayes 10, Noes 97.

Division No. 51]
[8.23 pm


AYES


Ashdown, Paddy
Rendel, David


Campbell, Menzies (Fife NE)
Skinner, Dennis


Carlile, Alex (Montgomery)
Tyler, Paul


Foster, Don (Bath)



Lynne, Ms Liz
Tellers for the Ayes:


Maddock, Mrs Diana
Mr. Archy Kirkwood and


Nicholson, Miss Emma (W Devon)
Mr. Chris Davies.


NOES


Ainsworth, Peter (E Surrey)
Butler, Peter


Ancram, Michael
Carrington, Matthew


Arnold, Jacques (Gravesham)
Cash, William


Atkinson, Peter (Hexham)
Channon, Paul


Baldry, Tony
Clappison, James


Banks, Matthew (Southport)
Clarke, Kenneth (Rushcliffe)


Biffen, John
Clifton-Brown, Geoffrey


Bonsor, Sir Nicholas
Coe, Sebastian


Bowis, John
Congdon, David


Brandreth, Gyles
Conway, Derek


Browning, Mrs Angela
Coombs, Anthony (Wyre F)


Bruce, Ian (S Dorset)
Currie, Mrs Edwina






Curry, David
Merchant, Piers


Davies, Quentin (Stamf'd)
Mitchell, Sir David (NW Hants)


Dover, Den
Nelson, Anthony


Duncan, Alan
Neubert, Sir Michael


Duncan Smith, Iain
Nicholls, Patrick


Dykes, Hugh
Norris, Steve


Eggar, Tim
Ottaway, Richard


Elletson, Harold
Paice, James


Evans, Jonathan (Brecon)
Pickles, Eric


Evans, Nigel (Ribble V)
Portillo, Michael


Evans, Roger (Monmouth)
Redwood, John


Fox, Dr Liam (Woodspring)
Roberts, Sir Wyn


French, Douglas
Robinson, Mark (Somerton)


Fry, Sir Peter
Spencer, Sir Derek


Gill, Christopher
Spink, Dr Robert


Gillan, Mrs Cheryl
Sproat, Iain


Goodlad, Alastair
Steen, Anthony


Greenway, John (Ryedale)
Stephen, Michael


Harris David
Sumberg, David


Hughes, Robert G (Harrow W)
Sweeney, Walter


Hurd, Douglas
Townsend, Sir Cyril (Bexl'yh'th)


Jenkin, Bernard (Colchester N)
Tredinnick, David


Kirkhope, Timothy
Trend, Michael


Knapman, Roger
Twin, Dr Ian



Waller, Gary


Kynoch, George
Waterson, Nigel


Lamont, Norman
Watts, John


Legg, Barry
Whittingdale, John


Leigh, Edward
Widdecombe, Miss Ann


Lester, Sir Jim (Broxtowe)
Willetts, David


Lidington, David
Winterton, Mrs Ann (Congleton)


Lloyd, Sir Peter (Fareham)
Winterton, Nicholas (Macclesfld)


Lord, Michael
Wolfson, Mark


Luff, Peter
Wood, Timothy


MacKay, Andrew
Young, Sir George


Maclean, David



McLoughlin, Patrick
Tellers for the Noes:


Malone, Gerald
Mrs. Jacqui Lait and


Matlow, Tony
Mr. Bowen Wells.

Question accordingly negatived.

Clause 27

GRANTS FOR BUS SERVICES

Mr. Clappison: I beg to move amendment No. 32, in page 15, line 38, leave out 'in the council's area'.

Madam Deputy Speaker: With this, it will be convenient to discuss the following amendments: No. 23, in page 15, line 39, after 'area', insert
'or which serves the needs of persons living within the Council's
area.
Government amendments Nos. 33 and 24.

Mr. Clappison: Amendments Nos. 32, 33 and 24 fulfil undertakings we gave in Committee, and I believe that they will be widely welcomed. On that basis, I hope that the hon. Member for Newbury (Mr. Rendel) will feel able to withdraw amendment No. 23.

Mr. Rendel: I shall not detain the House long on this amendment. I was delighted to see that one of my amendments had been taken over by the Government, particularly as I had already tabled it for this debate before the Government tabled their amendments. I moved this precise amendment in Committee, when the Minister said that he would look at it again and bring forward a technically proven amendment on Report. I am delighted

to hear that my original amendment in Committee and this amendment on Report have now been proved by him to be technically competent.
Amendment agreed to.
Amendments made: No. 33, in page 16, line 4, after `if' insert—
'(a) the bus service benefits, or appears to the council likely to benefit, persons living in the council's area, and
(b)".'.
No. 24, in page 16, leave out lines 8 to 10.—[Mr. Clappison.]

Schedule 3

MINOR AND CONSEQUENTIAL AMENDMENTS

Mr. Clappison: I beg to move amendment No. 35, in page 24, line 9, at end insert—
'Local Government (Financial Provisions etc.) (Scotland) Act 1962 (c.9)
. In section 4 of the Local Government (Financial Provisions etc.) (Scotland) Act 1962 (reduction and remission of rates)—

(a) in subsection (5) for "the following subsection" there is substituted "subsection (6) or, as the case may be, (6A) of this section",
(b) in subsection (6) for "the following subsection" there is substituted "subsection (7) of this section", and
(c) after subsection (6) there is inserted—

(6A) Without prejudice to subsection (6) of this section, where any reduction or remission of rates is determined under subsection (5) of this section in the first six months of a year, the reduction or remission may be granted—

(a) for the preceding year;
(b) for a specified term of years, not exceeding five, beginning not earlier than the preceding year nor more than twenty four months after the date of the determination;
(c) for an indefinite period beginning not earlier than the preceding year, subject to the exercise by the rating authority of their powers under subsection (7) of this section.".'.

Madam Deputy Speaker: With this, it will be convenient to discuss also Government amendment No. 36.

Mr. Clappison: The purpose of the amendment is to give local authorities greater flexibility at the end of the financial year to deal with certain cases where otherwise injustices would arise as a result of the year coming to an end and not working with council procedures.
Amendment agreed to.
Amendment made: No. 36, in page 27, line 28, at end insert—
'. In section 47(7) (discretionary relief), after "made" there is inserted "more than six months".'.—[Mr. Clappison.]
Order for Third Reading read.

Madam Deputy Speaker: Queen's consent? I shall suspend the sitting for five minutes owing to a technicality.
Sitting suspended.

On resuming—
Queen's Consent, on behalf of the Crown, and Prince of Wales's Consent, on behalf of the Duchy of Cornwall, signified.
Motion made, and Question proposed, That the Bill be now read the Third time.

Mr. Bendel: I am pleased to have an opportunity to speak briefly on Third Reading. We discussed subsidiarity earlier this evening, but there is one aspect about which, for various reasons, we have not spoken.
We failed to get across the point about whether discretionary or mandatory relief should be given, and the point about the powers of parish councils. It is sad that the Bill afforded yet another opportunity that was not taken up by the Government: the chance for London boroughs to have parish councils.
Since the matter was raised in Committee, there has been a great increase in interest in whether London boroughs should be allowed to have parish councils. A number of campaigns have begun, and it was reported in the Evening Standard that many Labour councillors in London support the idea, although their party did not support the relevant amendment in Committee.
I hope that the amendment will be moved in the House of Lords, as that is now the only chance of its being including in the Bill. That is a strong possibility. The matter was raised once before in this House—a Bill on London parish councils was introduced about 20 years ago. Its purpose was to make changes in the administration of local government in Greater London by the establishment of London parish councils. The Bill was presented by the then hon. Member for Sutton and Cheam, Mr. Graham Tope, now Lord Tope. Among the Bill's supporters was the right hon. Member for Suffolk, Coastal (Mr. Gummer). I should be interested to know whether he still supports the principle.
Question put and agreed to.
Bill read the Third time, and passed.

Chesterfield Tribunal Suite

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Peter Ainsworth.]

Mr. Harry Barnes: The subject of the debate is the closure of the Chesterfield tribunal suite. In normal circumstances, my right hon. Friend the Member for Chesterfield (Mr. Benn) would be present, as the tribunal is located in his constituency, but he has flu and cannot be with us tonight; my hon. Friend the Member for Bolsover (Mr. Skinner) is present—all three of our constituencies are affected by the closure.
From correspondence that the Minister has sent me, I know that an apology will be made later on certain matters in which he is involved and which affect aspects of the matter under debate.
The Chesterfield tribunal suite operates under the independent tribunal service. It hears about 1,000 cases each year and has a six-month backlog, with 329 cases outstanding on social security matters alone. Throughout the whole of the east midlands last year, 4,591 cases were dealt with, and that figure includes the considerable work load of the Chesterfield tribunal suite.
Five types of case are heard: appeals on social security matters, appeals on disability living allowance and so on, child support appeals, vaccine damage appeals and medical appeals. Sixty per cent. of the Chesterfield tribunal suite's cases are social security appeals, 20 per cent. are disability appeals and 20 per cent. cover the other three types.
The catchment area is wide, covering sections of west Derbyshire from Buxton to Matlock, virtually all the constituencies and districts of Amber Valley, Bolsover, North-East Derbyshire and Chesterfield. As the Mansfield suite was closed in February 1996, cases from Nottinghamshire are also occasionally dealt with in Chesterfield.
In many cases, representatives appear on behalf of the appellant. It is estimated that 50 per cent. of Chesterfield's cases are attended by representatives of various organisations assisting the appellant. That compares with a figure of 25 per cent. nationally and for the east midlands. The Minister may have more accurate information; those figures were supplied by the organisations involved.
The bodies that represent appellants include the welfare rights service of Derbyshire county council, which covers about 60 per cent. of cases. Nottinghamshire county council's similar service is occasionally involved. Representatives of citizens advice bureaux from a wide area attend, including those from Chesterfield, Staveley, North-East Derbyshire, Matlock and Worksop. Trade unions such as Unison, the Amalgamated Engineering and Electrical Union, the GMB and the National Union of Mineworkers, and bodies such as the Chesterfield law centre, the Derbyshire unemployed workers centre, the Chesterfield support network and Incapacity Action are involved. A wide range of organisations, many centred in Chesterfield, are concerned with the well-being of citizens who are dependent on benefits, and who often encounter difficulty in the interpretation of their cases and need assistance.
The appeals procedures were changed last year under SI 2540, Social Security (Adjudication) and Child Support Amendment (No. 2) Regulations 1996. I believe that that change affects four of the five areas—vaccine damage is excepted—that I have mentioned. However, the traditional pattern of procedure still operates—I shall describe that which applies in the social security area. Recommendations are issued by the independent tribunal service, which supervises the activities of tribunals, and hearings are held in public unless there are agreed exceptional circumstances. If hearings are to be public, I think that it is more sensible to hold them locally. Any decisions reached by tribunals are likely to have local significance and to affect local organisations, including some of those that I have mentioned. If hearings were held further afield, it would be more difficult to translate the information at a local level.
People have a right to attend appeals hearings and be heard—although it is argued that the statutory instrument to which I referred discourages that practice. It is much easier for people to attend, present their case and be heard if hearings are held locally. People will feel much more comfortable in a local setting. The appeals procedure is traumatic enough without requiring people to travel to distant parts and present their case in unfamiliar surroundings.
The independent tribunal service procedure guidelines state that appellants should be put at ease. That is much more likely to occur—although it will always be difficult to achieve—if hearings are held in familiar surroundings where people may be represented by local bodies with which they are associated. The appeals board is expected to determine the facts by questioning the appellants and their representatives—although the statutory instrument seems to suggest that it should deal with matters of law and that the facts of the case should be resolved at an earlier stage. Nevertheless, the sequence of events is significant.
The results of appeals are very interesting. The Minister provided some figures on 4 November 1996 in answer to a question from my hon. Friend the Member for Newport, West (Mr. Flynn) about social security appeals and the all work test. They show that 46.2 per cent of appeals were successful. The success rate was roughly the same for cases that were presented by either the appellant or his representative—46.3 per cent. for the appellant and 45.8 per cent for the appellant's representative. However, 67.3 per cent of cases were successful when the appellant and the representative appeared together. When neither the appellant nor his representative attended the hearing, the success rate was only 6.5 per cent.
The results for other tribunals follow a similar pattern, and the pattern in Chesterfield is of that nature: the most successful hearings by far are those where the appellant and his representative appear together, and the least successful are those where no one turns up. If the Chesterfield tribunal suite is closed and people are forced to travel further afield, there is an increased danger that they will fail to attend hearings—or, at best, only the appellant will turn up. That will reduce the appellant's chance of achieving a successful outcome, as the best results are achieved when both the appellant and his

representative are in attendance. I cannot stress that point too strongly: the success rate of appeals hearings will suffer if the closure takes place.
Why has the tribunal been threatened with closure? I refer to "The Annual Report of the Council of Tribunals for 1995–96", which was laid before Parliament by the Lord High Chancellor and Lord Advocate pursuant to section 4(7) of the Tribunals and Inquiries Act 1992. It was ordered to be printed by the House of Commons on 17 December 1996. Page 52 states:
The President"—
the president of the independent tribunal service—
informed our Chairman in December 1995 that they had appointed an Estates Manager to establish their accommodation policy, and it was hoped that the appointee would be reporting on needs, demands and overall policy, by the autumn 1996. The Estates Manager subsequently explained to our Secretariat that the Independent Tribunal Service were preparing their accommodation plan against a requirement to reduce their accommodation costs by 30 per cent. over three years.
The policy to reduce accommodation costs considerably is affecting the tribunal service. Between January and early November 1996, no fewer than nine venues were closed—at Mansfield, which is near Chesterfield, Bridgend, Merthyr Tydfil, Pontypridd, Gloucester, Yeovil, Huddersfield, Scunthorpe and Paisley. Those closures took place despite the fact that the tribunal's report said that it would move towards considerable cuts late in 1996. Those cuts took place in advance of the schedule set out in the report.
In a written answer that will be a matter of some discussion, in which he was given the information about the nine venues that had closed, my hon. Friend the Member for Newport, West was also informed:
The independent tribunal service has no plans to close any other venues."—[Official Report, 4 November 1996; Vol. 285, c. 386.]
The Minister sent me a letter today, before the debate, in which he pointed out that there were inaccuracies in the previous answer and that it should have been different in the circumstances. People in the area are considerably agitated, because things were said in the House that turned out not to be correct, and the independent tribunal service was moving towards closure programmes, which had been denied in the earlier answer.
On 14 January 1997, it was announced at a meeting of tribunal users that the Chesterfield tribunal suite was to be closed. Furthermore, that announcement is in conflict with letters that Members of Parliament for the area have received. I refer in particular to a letter sent to my right hon. Friend the Member for Chesterfield on 6 January, from the operation manager of the Birmingham region of the independent tribunal service, which said:
As yet, however, there has been no formal decision about closure. We will continue to consult with all local interested parties and this process will include discussion on whether, having perhaps closed the permanent venue, we can/should identify a suitable casual venue that could be used on an ad-hoc basis. A tribunal user group meeting has been arranged for 14 January and it is hoped that some of the issues raised by local welfare rights groups can be addressed more fully.
I will ensure that all interested parties are notified of any developments in this matter.
However, at the meeting on 14 January, which was attended by 40 people from user groups, and by those who support user groups, it was announced that the venue was to close and that any consultations would be about not the


closure of the venue but the mechanism of transformation, or possibly the establishment of a casual venue. That resulted in a powerful reaction in the area, because people expected that the meeting would occur at a stage in the process of consultation on whether the venue would close.
I have given the Minister prior notice of a number of questions so that he can provide answers. I shall elaborate on each question. First, when was the decision made to close the Chesterfield suite? Was it made by 4 November, when the question from my hon. Friend the Member for Newport, West was answered in Hansard? Was it made by 6 January, when the letter went to my hon. Friend the Member for Chesterfield? Had it been made by 17 January, when early-day motion 354 was submitted, which had the support of my right hon. Friend the Member for Chesterfield and of my hon. Friends the Members for Bolsover and for Mansfield (Mr. Meale)? Exactly when was the decision taken?
Secondly, who was involved in the decision-making process? Had any prior consultation taken place? The letter that the Minister sent to me earlier suggests that there was some consultation, because letters were flowing between Members of Parliament and the industrial tribunal service. To my knowledge, those letters arose because of objections from Members of Parliament, and they received answers. I think that that was the approach with many user organisations as well.
Thirdly, what criterion is used when deciding to close the venue? Is it mainly costs? Is any consideration given to what benefit the tribunal's operations might have to the local community that it serves? There will be financial benefits within that community. Are they assessed in any way against the revenue costs involved, perhaps per case?
Fourthly, what are the accommodation costs of the Chesterfield suite? Is any consideration given to the moneys, for example, that it raises for the local economy? If we had that information, perhaps we could judge the cost criterion among the interested groups, individuals and Members of Parliament.
Fifthly, what other venues are to be closed? In particular, is the Derby venue safe, given the closure in February 1996 of the nearby Mansfield venue? Derby is a single tribunal suite similar to the Chesterfield model. If it were also under threat, there would be no provision in Derbyshire. That is not to say that the maintenance of the Derby suite would be adequate for north Derbyshire, because many cases would be directed to Sheffield rather than to the other end of the county.
Sixthly, are there plans to abolish and replace the independent tribunal service? A number of people have expressed their concerns about that. Seventhly, is the current closure programme due to pressures on the ITS? Has it come up with a programme of reduced costs in response to those pressures?
Eighthly, why was the closure of the Chesterfield suite announced without proper prior consultation with interested parties? Ninthly, is not the decision to close the suite contrary to the written answer that was given to my hon. Friend the Member for Newport, West? I suspect that the Minister will say that it was, but that a further answer has been provided, so there has been a retrospective adjustment. I am not sure that retrospective adjustments are acceptable; it is the information in the original answer that has affected the position until now. Only now, in this debate, will the problems be clearly explained to us, and we can respond to that.
My final question is, can the decision to close the Chesterfield suite be withdrawn, at least to allow the promised consultation on its future genuinely to take place? There are strong reasons for holding such consultation, given the written answers in Hansard on 4 November.
A high representational level at Chesterfield would be helpful to the tribunal service. Welfare rights bodies and bodies such as the unemployed workers centre discuss cases, and if they do not stand much of a chance, because the facts of the case do not comply with the regulations, they are weeded out. It is helpful to have well-organised experts who can advise people locally.
If people want me to put a case to the ombudsman, I feel that it is my duty to ensure that they put their case as fully as possible; otherwise, I say to them, "No, this is not a matter for the ombudsman. You would be better going to a solicitor. There are other avenues that you could take first, so that your case is stronger at a later stage." The bodies in the area are as well organised as they can be with limited resources. They have expertise, and can offer this type of assistance.
The alternative to the Chesterfield suite is in Sheffield. It is not in the centre of Sheffield, so some people have to make three or four bus journeys. It has been argued that that is no different from people having to travel from north Derbyshire to Sheffield for social and shopping purposes, but that is not so. As it is not in the centre, people have to travel to Attercliffe. Judge Keith Bassingthwaighte, president of the industrial tribunal service, advanced that argument in a letter which, although it has been circulated quite widely, has not been sent to local Members of Parliament.
Many people in the area are in the poverty trap. They do not have cars, or access to them. People living in areas in my constituency such as Danesmoor and Holmewood would find it very difficult to get to the other side of Sheffield. The Minister may say that the tribunal service can offer alternative facilities, and in some circumstances it is possible to use taxis, but even with the Chesterfield suite it is not easy to establish such an arrangement.
"A Guide to Reviews and Appeals", NI 260, contains a section on taxis and hired cars. Page 89 states:
You can claim for the hire of a taxi or private car if:
you are unfit to travel by public transport (this could be because of age or infirmity)
or public transport is not available at a suitable time. You will be asked to give a written explanation.
You should get a receipt for expenses. If the DSS agrees that a taxi is necessary and you would like the fare to be paid in advance, arrangements can be made with the taxi company for a bill to be sent direct to the DSS for payment.
That is clear when we study the detail, but the arrangement is not simple or straightforward for those who are trying to deal with officialdom, and to obtain what assistance they can.
Not only appellants but bodies representing them will be affected. In many cases, the further afield they are supposed to be going, the harder they will find it to act on behalf of individuals. The problem will be as bad for them as it is for appellants, if not worse.
It is difficult for people even to use the current provision. In many instances, the pressure of dealing with an alien system full of rules and difficulties puts


people off. The Derbyshire unemployed workers centre, operating from Chesterfield, published the case of a Mansfield man who had written to the centre. He had tried to cancel his appeal, and had then refused to attend. He wrote:
I have been made sick by the trauma which has been put on me and I wish I had never started this nightmare.
The laws and rules are against you before you start anything.
I have not been sleeping at night worrying about the Tribunal. I will stay on my small pension.
It's worse than being tried for murder.
So please do as you like. I can't do anything about it. I am trying to put the nightmare out of my mind. Please, please leave me alone and let me forget this nightmare".
We do not know the details of that case. Perhaps the individual concerned had a particular problem; perhaps a bit of counselling and assistance would have enabled the case to be pursued. It does, however, illustrate the daunting nature of the procedure for many people, and that procedure should not be made even more daunting.
The context of the tribunal procedures has been affected by the statutory instrument to which I referred earlier. Many people feel that they are under pressure to forgo oral hearings. Things will be more difficult in the Chesterfield tribunal, but the move to Sheffield will add to the problems.
I forwarded to the Minister a letter from my constituent, Mr. Marsden-Jones of Holymoorside, who helps at a citizens advice bureau. The Minister replied:
Mr. Marsden-Jones is concerned with oral hearings, on which there has been a misunderstanding of the effect of the regulations. Articles in the Press have fuelled that misunderstanding. Those opposed to the change have contended that it represents a reduction in an appellant's rights. I can assure you that it does not; the right to an oral hearing remains absolute.
I know that that right remains, but the rest of the Minister's explanation suggests why people might turn to the procedures less and less. He continued:
Appellants are being asked at the outset if they want to attend the hearing of their appeal and if they do not reply, or say no, arrangements will be made for the appeal to be heard on the papers. Appellants can change their minds at any time up to the issue of the tribunal decision on the case. This change is designed to identify in advance those appellants who will not be attending so that the Independent Tribunal Service can arrange its work more efficiently.
However, that change also means that appellants are more likely to be persuaded by the rules to forgo their right of appearance; they will be encouraged to pursue appeals through written documentation.
The Minister's letter continued:
As Mr. Marsden-Jones is aware, some appellants undoubtedly find the prospect of appearing at even an informal hearing daunting. We believe that they would welcome the opportunity to appeal, and still have the opportunity to respond to the adjudication officer's contentions, but not feel obliged to appear in person.
I grant that there is a sense in which that might be true for some people, but the Minister is really saying that the procedure is good because it works in cutting the number of oral cases. I do not think that its operation will benefit the people concerned.
Mr. Marsden-Jones said:
As a volunteer in the CAB for over nine years my experience is with the 'real world'. The average member of the public cannot be aware of the implications for them of the ever increasing benefit

and disability legislation, consequently we only see a very small percentage of those with legitimate claims. It is crucial therefore that these changes do not further prejudice their chances at appeal. I feel strongly that these changes should be challenged and that careful monitoring will prove this to be well founded.
Even if my hon. Friend the Member for Bolsover and I persuade the Minister to put off closure of the Chesterfield tribunal suite, many problems will remain for it and its equivalents elsewhere. Certainly, the difficulties increase the further away such services are from centres of population.
Until now, the House has been misled about whether there would be further closures, but I know that that situation will be corrected. Retrospective answers are not entirely satisfactory. That is another reason why the closure statement should be withdrawn. User organisations should be able to enter into proper consultations so that their points can be fully put and weighed.
Today I received a copy of a letter from Philip Robinson, chairman of CHART '99—the Chesterfield area regeneration team—to the president of the independent tribunal service. He states:
The main purpose of CHART '99 is the economic regeneration of North Derbyshire and most of our activity is directed to the supply side of market activities. We are, as may appear obvious, also concerned with the demand side of economic life in our area though our interventions are typically more problematic and probably have a tendency towards maintaining positions rather than increasing them.
In our area blighted by pit closures and general 'downsizing' in other local industries, too many of our citizens, through no fault of their own, are dependent on welfare benefits. Our task is to reduce their number by creating jobs. However we can only be concerned that, until we have made significant progress in that direction, the legitimate take up of benefits is maximised.
He goes on to say:
I am led to understand that just one of the Chesterfield based agencies recovered over £250,000 following appeals and £1.3 million totally. In a stressed economy such as ours, that is not an insignificant sum to place in jeopardy.
I am sure my Board would support me in appealing that you reconsider your decision to remove tribunal facilities in Chesterfield.
There is therefore widespread feeling against closing the suite among trade unions and organisations in the Chesterfield area—such as CHART '99, for example. They are very concerned about the matter and urge the Government to ensure that the doors are not closed and that a consultation exercise—which they had expected to occur—is undertaken. They understand that the ITS is involved in a rationalisation programme, but believe that there should first be consultation. I ask that we first fully consider all the factors, so that perhaps some of the heat that has built up on the issue in the Chesterfield area can be diffused.

Mr. Dennis Skinner: I thank my hon. Friend the Member for North-East Derbyshire (Mr. Barnes) for stepping in for me last week on a point of order on this matter to Madam Speaker. He asked her whether she could intervene in the issue, and she very kindly told him that he should use his ways and means to try to raise it in the House, and that he might be allowed 15 minutes to do so. Today, the net result has been that


he has been able to speak on it at much greater length than we had expected, because the House finished its business early.
I also compliment my hon. Friend on his chronology of events leading up to the meeting with Mr. Coulthard, the regional director of the independent tribunal service. Last week, in Chesterfield, Mr. Coulthard met my friends and other people's friends, who thought that they were going to meet him for consultation on the proposed closure of the Chesterfield tribunal suite.
Those people thought that the meeting would allow them an opportunity to make a case against the closure, but, lo and behold, it turned out to be a completely different type of meeting. Contrary to what we have been told by the Tory Minister, who said that consultation was on the way, the director told them, "There ain't any consultation; we've come here to sound a death knell," such as has been sounded over factories and pits across Britain, especially in our area.
For some years before I was elected as a Member of Parliament, I represented many people—mostly miners with whom I worked in the coalfield—at tribunals. It was not unusual for me to go to places such as Sutton in Ashfield, which is in a neighbouring constituency, to Chesterfield, to Mansfield or to a medical appeal tribunal in Nottingham to represent disabled people. Although we occasionally fought other cases, by and large we made representations on behalf of people who worked in the coal mining industry who would be gasping for breath when we met them on the stairs. They were casualties of the coal mining industry and people who needed help, and we operated with that in mind.
My job as those people's representative was to make a case on their behalf and say, "Look here, you got it wrong. This person should have the special hardship allowance." The Government changed the hardship allowance to the reduced earnings allowance, and then reduced the reduced earnings allowance from about £40 to about £9 a week. The people represented at last week's meeting are the same type of casualties who want to appeal against what they regard as harsh decisions. As my hon. Friend pointed out, other groups now need to be represented, some of whose appeals relate to disablement benefits. However, in the main, it is still the same kind of operation with which I was involved.
Recently—since I came to the House—the Sutton in Ashfield venue was closed, and then the Mansfield venue closed. That meant more people having to go to the Chesterfield tribunal to have their cases heard. As my hon. Friend asked, is it any wonder that Chesterfield not only has to deal with more than 1,000 cases a year but has a backlog of more than 300, according to the local social security office? They are not our figures—we have not culled them from a Marxist periodical—but the Government's figures.
We fervently believed that our friends were going to take part in a consultation to try to convince the regional director of the need to keep the Chesterfield venue open. Parts of a total of six constituencies are affected. The total area covered includes High Peak and Buxton and extends to west Derbyshire. Much of the area is rural and descends into Bolsover, which is nearly 30 miles long and contains 20-odd villages. My hon. Friend's constituency probably also has 20 villages.
Bus services in those areas are poor, and the people affected by the closure are the very ones who had difficulty getting even to Chesterfield, but are now being required to make the long trek not just to Sheffield but to the far side of Sheffield. We have calculated that, in future, some people going to appeal against decisions will have one train ride and two or three bus rides—in some cases, four.
In the past few years, some of us—my hon. Friend in particular—have been fighting for equal rights for disabled people. We have been told time without number that the Government are anxious to help the disabled and give them equal rights, so they introduced a Bill—it was a tinpot Bill and not what we wanted, but the Government claimed that it was going to provide some form of equality.
I have to say that one cannot provide equality to disabled people by closing appeal venues and calling on those people to go to Chesterfield station, down the steep hill—it is not on the flat—get off the train at Sheffield and find their way to the other side of the city. And all for what? Presumably the aim is to save money.
The people affected live in an area where there used to be 30-odd coal mines and some factories associated with the mining industry. They have all been closed; not a single pit remains—but the casualties are still there.
Surveys carried out in my constituency and that of my hon. Friend found that, in some areas, unemployment is more than 50 per cent. Of course, not all the unemployed get unemployment benefit. Some get the benefits to which my hon. Friend referred—that is the nature of things. The unemployment figures are phoney. We are dealing not with the same work force that we once had but with people who probably need benefits of one kind or another, and need to appeal against decisions on those benefits to a greater extent than was the case when all the pits were open.
The area is generally rural. If it was a chunk of a city, I could understand some civil servants sitting in their room and charting out a little place for a tribunal venue. We are talking, however, about all or part of six constituencies; we are talking about a population of well over 300,000. All those involved are having to tramp up and down to get their cases heard.
We are not talking about golden handshakes, are we? There is a world of difference between somebody receiving a golden handshake and somebody appealing at the Chesterfield tribunal for a benefit of the kind that my hon. Friend the Member for North-East Derbyshire described. We are talking about a few pounds a week in some cases, not about the golden handshakes that are handed out to the fat cats in the City. Is it any wonder that, when the consultations took place last week, there were 30-odd representatives from the unemployed workers centre, from every local authority, from all the unions concerned and from the citizens advice bureau, whose workers do their jobs on a voluntary basis?
It was not just Labour people who attended the meeting; there were people from other political parties. My hon. Friend the Member for North-East Derbyshire referred to Mr. Robinson. He is part of a well-known Tory family in Chesterfield; there are not many left. He is head of some quango, as one would expect, but even he has put his name alongside the names of those who want the Chesterfield tribunal to remain in operation.
This is a class issue; I know that this is only an Adjournment debate, but it is a class issue. There are people who can make money when they leave their jobs, but we are talking about people who are scratching about for a few pounds a week, and who are being told that they have got to go to Sheffield.
The net result—they probably know this—is that the Government will save a bit of money because some people will not be able to make the journey. Everyone knows that disabled people have to weigh up the consequences of marching here, there and everywhere. For disabled people, it is a matter not just of sitting on a bus, but of the problem of having to go through a bit of exercise. The time they will have to spend is also a problem. Some of them want to be at home; they do not want to travel for more than two hours to Sheffield, attend the tribunal and then have a journey of more than two hours back home.
The Government should play the game. The answers that I and my hon. Friends received led us to believe that there would be a nice little consultation and that we could rely on the people from the local authorities and the others to put forward such a sterling case that the tribunal would be able to survive. That did not happen, and it is unfair.
On that count alone, the Minister should say, "Let's turn the clock back. A wrong has been done." The Minister gave me a parliamentary answer that turned out not to be true. We think that he will admit that tonight; he has already done so in a letter to my hon. Friend the Member for North-East Derbyshire. A mistake has been made. As the Minister has made a mistake—he may have done so inadvertently, but a mistake has been made, and somebody has been led up the garden path—he should do the decent thing and say that the Department will start all over again. We are not talking about £60 million for a royal yacht. I only say that en passant, but I am trying to make a comparison. We are talking about a small amount.
The Minister should be big enough to say, "Yes, a wrong has been done. I made a false statement. I didn't realise that the information I received was wrong, and I passed it on to the House. I am sorry. As there has been a mistake, we are going to start the process again."
I have a suggestion for the Minister—my hon. Friend has more or less put it to him as well. Let us not close the door today. Let us have a meeting between Members of Parliament, to which we will bring some of the representatives who were at the meeting last week, so that the case can be put again and they will know that at least some consultation has taken place. If the Minister agrees to that, they will be able to convince him—perhaps more effectively than myself and my hon. Friend—why it is necessary to keep the place open.
Some people say that the Chesterfield tribunal suite is going to close because of the cost. I should tell the Minister, in case he does not know, that the lease for the suite includes other rooms—some of which are unoccupied. That is not the fault of the representatives who go there to put cases on behalf of their clients from the unemployed workers centre, welfare rights groups or citizens advice bureau. It is part of the Government's philosophy to keep such rooms empty. The Government should not blame the representatives for part of the block not being let, or say that the costs are so extreme because of it.
The Minister should not tell us, either—I do not think that he will, although my hon. Friend and I suspect that it is true—that the service is being shifted to Sheffield because his Department has some spare space up there as well. The disabled people who are going to be plodding down the hill to Chesterfield station, plodding back up the other one in Sheffield—another hilly city—and then getting on a bus will have to suffer just because the Minister's Department has not been able to deal with things that are out of other people's control and ensure that the leases get full value for money. That responsibility should belong with the Government.
I could draw a comparison with the Department of Trade and Industry. I have been walking up Victoria street for the past 20-odd years, and over the past five or six, I have been passing closed DTI offices. That closure has cost a small fortune; a third of Victoria street has not been let. It belongs to the Government and has been paid for by the taxpayer. Now, it has opened again. How much has that cost?
We are talking about a little place, where a few representatives go along to meet the chairman of the tribunal, someone from one side of industry and someone from the other to hear the case of someone who has come up the stairs coughing their lungs up, or someone who has a leg missing, or someone who does not have two ha'pennies to rub together. That is a far cry from all the money that has been spent on the DTI offices just up the road.
I could cite many more examples of how the Government have wasted money, such as £6 million on refurbishing the Tea Rooms and other facilities in this place during the long recess. Our friends up in north-east Derbyshire, Bolsover and Chesterfield read the papers, and they cannot understand why they have been picked on in such a fashion. First their jobs have been taken away from them, and then, when they have to appeal to get a few benefits, they are kicked in the gutter.
Judge Bassingthwaighte has told us that his information is that there was a noisy meeting last week with our friends the representatives. They were bound to be noisy. Such was the nature of the response, there were not enough seats. It is very rare to get representatives of every local authority and welfare rights group together in one fell swoop. They had to sit and listen to this fellow say, "There is no consultation. I have come to tell you that the place is going to close."
I am told that, at one point in the meeting, there was a little chink of light, when it was indicated that there might be an opportunity to use another Chesterfield venue on occasions. I do not know whether the Minister knows that.
I have another proposition to put to the Minister, apart from suggesting another meeting. We have a place called the miners' offices, which have a lot of space—after all, there are only a few miners left. If there are cost problems at the Chesterfield suite, the Minister should try the miners' offices—they will come a lot cheaper. Those offices would be ideal, and they are in a good situation in the middle of Chesterfield.
There is a case to be made. The Government's parliamentary answer was not correct: people were led up the garden path. People also felt that that they had a raw deal from consultation. Somebody has to climb down and give those people a second chance to ensure that their cases are put. We are ready and willing—myself, my hon.
Friend the Member for North-East Derbyshire and my right hon. Friend the Member for Chesterfield (Mr. Benn), when he has got over the flu—to meet the Minister.
The Minister or some of his civil servants should go and look at the place. They should visit a few villages. As I said earlier, the tribunal area starts at the bottom of my constituency, including Pinxton and South Normanton, and it extends way out to West Derbyshire and up to Buxton. The Minister or his civil servants should go and see those pretty villages which are all part of that hinterland. Chesterfield and Staveley are highly populated, but the rest are old-fashioned pit villages or farming areas. The area is too big for the tribunal to be moved to Sheffield. The Minister should have a site visit, and take a fresh look before the matter is closed for good.
The issue will not benefit my hon. Friend the Member for North-East Derbyshire and me. I do not suppose that we would be inconvenienced if the suite closed. We would feel guilty about it, but the issue is not about us. It is about disabled people, because most of those people who use that place in order to appeal against threatened reductions in benefits have been damaged in some way, either by their work or in other ways. In many cases, mother nature has not has been as kind to those people as she has to my hon. Friend, the Minister and me. Some of them have been born with disabilities, and are constantly fighting against the system. Instead of telling them that they must travel another 20 or 30 miles to make their appeal, a decent society should enable those people to go round the corner to their village hall or local town council.
The case has been made by my hon. Friend the Member for North-East Derbyshire, and I am here to help him to ask the Minister not to close the book. Give us a another chance to ensure that the Chesterfield tribunal suite, or some other place in Chesterfield, remains open for those people, many of whom are disabled.

The Parliamentary Under-Secretary of State for Social Security (Mr. Roger Evans): It is one of the glories of the House of Commons that hon. Members can raise serious constituency interests at length, as has been done this evening. We have listened to two very powerful speeches. I am especially grateful to the hon. Member for North-East Derbyshire (Mr. Barnes) for writing to me today and setting out a list of his queries. He outlined those queries in his speech, but I have had the courtesy of notice from him and I hope to answer as many of his questions as possible.
I shall begin with the matter of a parliamentary answer, which has been mentioned several times. I gave a written answer to a question tabled by the hon. Member for Newport, West (Mr. Flynn):
To ask the Secretary of State for Social Security which venues have ceased to be used by social security appeals tribunals since January 1996; and which venues it is proposed to cease using.
I answered by listing the nine venues referred to by the hon. Member for North-East Derbyshire, and I will not delay the House by repeating them. I then added:
The independent tribunal service has no plans to close any other venues".—[Official Report, 4 November 1996; Vol. 285, c. 386.]
I will explain what happened in detail, and then explain why, in my view in retrospect, that was not a satisfactory answer. I shall also apologise. From the point of order raised by the hon. Member for North-East Derbyshire on

15 January, I was aware that the answer had been queried. Since then, I have asked for a number of inquiries to discover precisely what happened.
When a parliamentary question is asked about the activities of the ITS—which is an independent service—information is requested by my officials from the ITS. Officials of the ITS and my Department then liaise on the reply. It is done in this way to be as helpful as possible to parliamentary colleagues and to avoid having to refer them directly to the ITS. At the time that I approved the draft answer submitted to me, I believed that the reply was correct. After the point of order was raised, I ordered a thorough investigation to be made into the circumstances surrounding the preparation of the answer.
What had happened was that the parliamentary question was faxed to an official of the ITS, and a reply was given by telephone. I do not have a written answer from the ITS or a note of that telephone conversation, but it seems reasonable to say that there was a misunderstanding between the two people who dealt with this as to the extent and nature of the question and the reply. When I answered that there were
no plans to close any other venues
the language was too simple for what was at stake. Does "plan" mean a settled and determined course that has been finally decided? Does it mean a mere proposal? Is it a promise—as the hon. Member for North-East Derbyshire believed—that nothing will happen in the future? That kind of ambiguity should have been resolved by a more detailed wording to explain the background. My view, in retrospect, is that the answer should have stated that the ITS constantly reviews its running costs—of which accommodation forms a large part—and that the ITS was considering the continued usage of a number of tribunal venues. The answer should have stated that liaison with local users was also taking place.
The hon. Member for Bolsover told us this evening—although I was unaware of it at the time of the answer—that he and other parliamentary colleagues had corresponded with the ITS on the Chesterfield situation. Open correspondence concerning Chesterfield had been raised as early as March 1996, and continued with various local interested parties for the rest of the year. But I stress that no firm decision had been made at the time I gave the answer on 4 November.
After making further inquiries, I have been informed that it was not until 17 December 1996 at a management meeting that a provisional conclusion about the viability of the venue was reached. That provisional conclusion remained such so that a meeting could be held with local users on 14 January 1997 where arguments in favour of keeping the venue open could be considered. It is clear from everything that I have read—and from what I have been told this evening—that the meeting of 14 January was, if I can use the most neutral language, not a happy occasion.
The intention of ITS was that arguments could be listened to, and that the decision would be made afterwards. The ITS took the view that no persuasive arguments were raised at that meeting and the decision was made, I am told, the next day—15 January—when it began to be circulated. I apologise unreservedly, as I should have been aware of more of that detail. I should have made further inquiries. Unhappily, I did not, and I


gave a simple answer to what was clearly a complex history and background of which, at that time, I was unaware.
I should like to deal with the serious, immediate and practical issues involved, particularly those raised by the hon. Member for North-East Derbyshire about where do we go from here. The hon. Member for Bolsover made a powerful peroration to the effect, "Would the Minister do that and would the Minister do this?" I shall specifically answer his questions in a moment, but the position is not quite as simple as his speech might have suggested.
The independent tribunal service is by statute just that. The responsibility for running the ITS rests with its president, his honour Judge Keith Bassingthwaighte, who is appointed by the Lord Chancellor in accordance with the Social Security Administration Act 1992. He is both the judicial and—this is the unusual feature—the administrative head of the ITS. He is responsible for providing the forum to hear appeals against decisions of adjudicating officers. It is a matter of statute that decisions about tribunal venues, for example—the material matter which we are considering this evening—are a matter for him.
I cannot think of another parallel in Government or in the judicial system in which a judge is responsible by law for administrative matters. It is one of the oddities or unusual features of the ITS. That is one of the very matters considered in the consultation paper on improving decision making and appeals in social security which was mentioned by the hon. Member for North-East Derbyshire. It is a matter which the Government are considering now. In due course decisions will be made and subsequently announced.
That is the background to the debate. I should now like to consider the 10 specific questions that the hon. Member for North-East Derbyshire asked me. First, he asked when the decision was made to close the Chesterfield tribunal suite. A number of different dates were put to me.
I am advised by the ITS that the final firm decision was made on 15 January 1997 following the unhappy meeting the day before on the 14th. That news was communicated in a press release on 15 January and in a subsequent letter on 20 January from the president to interested parties, including some hon. Members who attended the meeting.

Mr. Barnes: The Minister mentioned a meeting on 17 December 1996 at which a provisional proposal for closure was put forward. It was then made the subject of consultation at the meeting on 14 January. There are clear differences of perception about what occurred at the meeting on 14 January. The ITS is treating it as a consultation meeting at which the user organisations would not focus on the issue. They went away on 15 January and finally made their decision. That is not the perception of the user organisations, which all argue that its representatives were told from the start that the venue was to be closed and that they were only there to be consulted about the method of closure. There is a case to look again more closely at what happened on 14 January because it affects the procedures involved. Although it was not satisfactory to have consultation on the 14th and the decision made on the 15th, with hardly any time to mull things over, it was procedurally

permissible because it represented a certain order of things. Did the process occur like that? If not, there is a good case for going back to the beginning of the process.

Mr. Evans: I hear what the hon. Gentleman has said, and I will outline what we should do next when I have finished answering his 10 questions. The hon. Gentleman is saying quite clearly that there is a conflict of view about exactly what happened at the meeting on 14 January. One party appears to take the view that it was a fait accompli and that it was just a question of the mechanics. I readily concede that that is not a proper consultation. The other view, which I gave on instruction, was that the meeting was a consultation.
In fairness, I was not there any more than you were, Mr. Deputy Speaker—all that we can do is rely on those who were and their recollections. His Honour Judge Bassingthwaighte wrote a letter to the various interested parties on 20 January. I imagine that the hon. Gentleman may have seen it. I shall quote from the letter because it is important that both views of the meeting are given. He said:
I directed that tribunal user groups should be set up throughout the ITS because I wanted to build a better relationship between the ITS and those who use the facilities which we provide. I did so expecting to provide a forum for rational and considered discussion by people who are willing at least to accept that different viewpoints exist, whether or not those viewpoints are ones upon which agreement can be reached. Such meetings have been held widely throughout the ITS during 1996 and have generally been successful, ordered and well received.
I am saddened to hear that the meeting on 14 January was ill-tempered"—
the judge was not there; he was reporting what his officials had told him—
and at times abusive and that a group of representatives left the meeting in a demonstration of dissent. Such behaviour does not augur well for future such meetings.
Neither I nor the judge was there. There are conflicting reports of what happened, but I think that I can describe that meeting with fair accuracy as not a happy one.

Mr. Skinner: The judge does not know any more than us, does he? Many of the people who went to Chesterfield had been to Mansfield earlier in 1996 when it was proposed that Mansfield should close. They did not view the matter with the same importance and they took part in the consultation, which seemed to be at a different level. Many of those who went to Chesterfield were at Mansfield, where there was no animosity, nobody got terribly excited and the decision was finally accepted. The reason why there was such ill-feeling and rancour at the Chesterfield meeting was simply that, having arrived in a crowded room where there were not enough chairs for everyone, people were told, "What's the point of you being here? We're going to close it."

Mr. Evans: I was not present and I cannot helpfully comment on that account, but I readily agree that if that is what happened, it was not a happy way to spend the evening and it was not a constructive consultation exercise.
I was asked who was involved in the decision-making process. I understand that the final decision was taken by the president after consultation with senior and local managers. I was asked what criteria are used when


deciding to close a venue. That is a difficult question to answer helpfully. I am advised that the broad principles taken into account include accessibility, suitability, usage of venues and value for money. Having regard to those principles, the ITS decided that Chesterfield did not meet the criteria for remaining open. I was asked what that meant; I was asked what the accommodation costs were at Chesterfield.
I am instructed that the ITS is liable for £128,000 a year in respect of rent and rates and for certain maintenance and utility costs of another £3,500. The point made by the hon. Member for Bolsover (Mr. Skinner) is correct: the ITS occupies only a portion of the building and pays about £28,000 of the rental costs. The ITS is responsible, on its budget, for the balance. Of the ITS budget, £7 million is spent on accommodation; if £100,000 is spent on unutilised accommodation—however it has arisen and whatever the circumstances—that is a sufficiently large sum for concern.
I was asked, not merely to correct the position in respect of Chesterfield, but about what other venues were to be closed. Understandably, the hon. Member for Bolsover asked me specifically about Derby. Let me bring the picture up to date. I stress that it is a matter for the ITS, but I am advised that Derby remains a core area for the maintenance of a tribunal venue for the foreseeable future.
In fairness to other hon. Members, having asked further inquiries to be made, I shall give the picture for other parts of the country. Consideration is being given to a new venue at Chelmsford that would replace the current leased venue at Colchester and poor-quality, casually hired venues in Essex. In Newport, Isle of Wight, consideration is being given to replacing a leased venue with casually hired premises. Bury St. Edmunds cases have been transferred to Ipswich. There is some rationalisation of casually hired venues in London. Barking and Walthamstow appeals are being heard in central London at Whittington house. Discussions are taking place on future plans for Edmonton. On the other hand, new premises have been opened in Blackburn and further new premises are planned for Motherwell.
I was asked specifically whether all that was due to pressure relating to the future of ITS—is it all about abolition? The answer is simply no. Decisions on venues are a matter for ITS. Decisions on the future of the appeals process are elaborately discussed in the document that was mentioned earlier. As I have indicated, the Government are considering the consultation and will make decisions and announce them in due course.
ITS has responsibility for its budget and it has to deal with the problems facing it. It is important that I stress the problems—
It being Ten o'clock, the motion for the Adjournment of the House lapsed, without Question put.
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Timothy Wood.]

Mr. Evans: There are serious problems facing ITS. The figures that the hon. Member for Bolsover quoted do not come from Marxist comics; they are, in part, the Department's figures. The striking figure was the six-month wait to get an appeal heard, as mentioned by the hon. Member for North-East Derbyshire, which is typical throughout the country. It is too long and is

especially unfortunate because, generally speaking, no benefit is received without the appeal being heard. Cases such as we have discussed should be tried more quickly.
What has happened is that the numbers of appeals have been rising dramatically in recent years. That is partly due to the introduction of incapacity benefit, but there are several other factors. The appeals intake in 1993–94 was 198,000, in the next year, it was 210,000, in 1995–96 it was 236,000, in 1996–97 it was 291,000 and it is anticipated to reach 334,000 in 1997–98. ITS has had the resources to match that. Strikingly, in 1994–95 there was actually an underspend of £5 million and the money was returned to the Department. There was a £2.3 million underspend in 1995 on a budget of £52 million. In 1996, the budget was increased to £54 million and it is not expected that there will be an underspend, but it is intended—this was part of the changed programme of economy measures—that somehow administration costs must be reduced. For 1997–98, the budget in the books is £49 million.
The effect of all that is that while in 1993–94 there were 35,000 sessions a year, that figure will rise to 68,000 in 1996–97. In other words, ITS has almost doubled the number of cases that it is hearing. That is extremely important in the interests of the public and Ministers are greatly concerned that that progress be maintained.

Mr. Skinner: It sounds to me as if, instead of closing the suites, the Government should be turning their attention to opening more. Here we have a massive backlog of cases and a rising number of people who are appealing—mainly, as the Minister said, for incapacity benefit, because about 4 million people have no job. Instead of closing the Chesterfield suite, the Government should open a few more.

Mr. Evans: Would that it was quite as easy as that. The problem is how to use such resources as are at ITS's disposal in the most effective way. I am not making this point in respect of Chesterfield, but, in the past, ITS venues have grown up haphazardly over a large number of years.
The hon. Member for North-East Derbyshire talked about the problem of oral hearings—indeed, one of his concerns was that, for several reasons, fewer people would attend, which argument he developed powerfully in connection with Chesterfield. Our change to the appeals regulations in asking people to request an oral hearing was made because, quite often, people filled in the form saying that they wanted to appeal, but did not explain what the issue was all about and then never turned up. If six cases are listed for a hearing before an appeals tribunal in a morning or an afternoon and one, two or three people whose appearance was expected and awaited and provided for then fail to turn up—often they never had any intention of turning up—it causes massive dislocation. It is an inefficient deployment of resources and forces other people to wait.
The Government have looked at that problem, which is why we have tried to improve the adjudication regulations. It is really a matter of domestic housekeeping to try to make the system work more smoothly and increase throughput. I stress that it is not a case of deterring people from appealing, nor of hoping, as the hon. Member for Bolsover suggested in one of his more


rhetorical passages, that we would save programme expenditure, as we are processing nearly twice as many appeals. We are trying to get the system moving more quickly because we are faced with a large caseload.

Mr. Barnes: I presume that people's failure to turn up for oral hearings and the problems that that creates for the ITS would be a smaller issue in Chesterfield than in many other areas. My argument was that in 50 per cent. of cases people were represented but only 25 per cent. of people were represented nationally. The strong organisations that exist in the area are feeding people through and sorting out some of the problems. They are ensuring that the cases are not simply speculative with no information behind them. It can therefore be said that Chesterfield is doing the type of job that many other bodies should be doing.

Mr. Evans: I heard what the hon. Gentleman said and, in my judgment, it was a striking feature of his speech that he made that point. I am not trying to argue—I would not dream of doing so—that, if the appellant and the person representing him are there, they will not do better. The hon. Member for Bolsover has represented people before such tribunals, and I did not practise at the Bar for more than 20 years without appreciating that advocacy occasionally produces results. We all know from our constituency surgeries, when we help people, that if one is there to help and advise, the chances are that one will identify the problem at least and point people in the right direction. If people go along to argue, that is better. I shall certainly draw Judge Bassingthwaighte's attention to that matter.
The next issue that I was asked was why the closure of the Chesterfield suite was announced without proper prior consultation with the relevant interests, a promise having been made in a letter to the right hon. Member for Chesterfield (Mr. Benn) on 6 January 1997. Let me say straight away that there is clearly a conflict about the history of what actually happened, and I shall come to what we shall do about that in a moment.
The next question that I was asked—realistically, this is the most important question—was whether Chesterfield's closure could be withdrawn at least to allow the promised consultation about its future to take place on a genuine basis. The hon. Member for Bolsover ended his speech on a very powerful note. I respectfully say that I was moved by it. He said, "A mistake has been made; do the decent thing and start all over again." Indeed, he asked me personally to do that.
I have a genuine difficulty: I cannot say that we shall start again because that is a decision for the judge, not for me. However, I can certainly say, and I will if it is desired by either of the hon. Gentlemen or their colleagues, that if they want to discuss the matter my door is open and I shall happily see them. It may be more constructive and helpful for them to meet representatives of the ITS because I think that what they really want to do is persuade the ITS that it should give the matter another thorough examination with an open mind. I cannot direct that such a meeting take place but I have heard the arguments—

Mr. Skinner: You can give them a nudge though, can you not?

Mr. Evans: I shall send the ITS a copy of Hansard, including the powerful speech of the hon. Member for

Bolsover and that of the hon. Member for North-East Derbyshire on the matter. It makes one unhappy when one has the sense that what has happened was not fair. That is not satisfactory.
Let us be practical for a moment. There are real problems with the present premises for a variety of reasons, of which I suspect the £100,000-worth of vacant space is the greatest. I surmise that it would be more practical to come up with some other venue in Chesterfield. The hon. Member for Bolsover made a specific proposal, but I will not play estate agent with him. I will communicate it to the independent tribunal service. It may be a helpful suggestion, which I will be happy to discuss with the hon. Gentleman later. It may be appropriate for the owners of the building to make a formal proposal in writing.
To sum up, there has been an unhappy clash over the past couple of weeks and an unhappy meeting on 14 January. A reorganisation may be necessary, and the ITS considers that there are compelling reasons to leave the present accommodation.
With regard to the inconvenience that would be caused to the hon. Gentleman's constituents if they had to travel to Sheffield, I am not familiar with the geography of the area.
The hon. Member for North-East Derbyshire referred once or twice to the industrial tribunals service—an easy slip of the tongue, but an entirely different organisation.
The independent tribunal service was said to be limited and daunting, but one of its striking features is its offer to pay for public transport or taxis to bring people to a hearing, and there are occasions when tribunals can be convened in people's homes. People who claim to have been unfairly dismissed would not get such treatment, but those who are unable to move might get it. It is a matter for the independent tribunal service. I shall re-examine the guidance. If there are difficulties in the way in which it is drawn and it puts people off, we will see whether anything more can be done.

Mr. Barnes: The Minister's contribution has been helpful. He has not opened the door in the way that we requested—he said that he could not do so, and that it was a matter for the Independent Tribunal Service—but he has not closed the door on us. He has given us some hope, and will pass on some material to the ITS. We might then have an opportunity to meet that body and, if necessary, the Minister.

Mr. Evans: I stress that I cannot open the door, as it is not my door, but that of the Independent Tribunal Service. I will meet the hon. Gentlemen and commend to the ITS the desirability of an early meeting. If the hon. Gentleman could put together alternative proposals for Chesterfield as quickly as possible, that would be helpful.
This has been an unfortunate matter as far as I am concerned, which began with the answer to a parliamentary question. I did not dream of the complications that lay beneath what appeared to be a simple matter to answer. Now that I have been informed of the facts, it is clear that there was more to it. I repeat the apology that I made earlier to the House.

Question put and agreed to.

Adjourned accordingly at twelve minutes past Ten o'clock.